ON vs. MPWR: Which Stock Should Value Investors Buy Now?


IInvestors interested in stocks in the Semiconductor – Analog and Mixed sector have likely heard of ON Semiconductor Corp. (ON) and Monolithic Power (MPWR). But which of these two companies is the best option for those looking for undervalued stocks? Let’s take a closer look.

There are many strategies for discovering value stocks, but we’ve found that combining a strong Zacks rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank highlights companies with positive valuation revision trends, and our Style Scores highlight stocks with specific characteristics.

Currently, both ON Semiconductor Corp. and Monolithic Power a Zacks rank of # 2 (Buy). This means that both companies have seen positive revisions to their earnings estimates. So investors should be sure that these two stocks have better earnings prospects. But that’s just one factor that interests value investors.

Value investors also try to analyze a wide range of traditional numbers and metrics to determine if a company is undervalued at its current share price level.

The Style Score Value takes into account a variety of key fundamental metrics, including the popular P / E ratio, P / E ratio, earnings return, cash flow per share, and a number of other key metrics that value investors frequently use.

ON currently has a price-to-earnings-ratio of 19.31 while MPWR has a price-to-earnings-ratio of 52.06. We also find that ON has a PEG ratio of 0.43. This metric is used in a similar way to the famous P / E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. MPWR currently has a PEG ratio of 2.08.

Another notable valuation metric for ON is its P / E ratio of 4.36. The P / B is a method of comparing the market value of a stock to its book value, which is defined as total assets minus total liabilities. In comparison, MPWR has a P / B of 15.39.

These are just a few of the metrics that contribute to ON’s B Rating and MPWR’s F Rating.

Both ON and MPWR are formidable stocks with solid earnings prospects, but based on these valuation metrics, we believe ON is the superior value option right now.

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.


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