ASE Technology Unit Buys Software Assets for About NT$771 Million

Investors interested in stocks from the Electronics - Semiconductors sector have probably already heard of ASE Technology Hldg (ASX) and Nova Ltd. (NVMI). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, ASE Technology Hldg is sporting a Zacks Rank of #2 (Buy), while Nova Ltd. has a Zacks Rank of #4 (Sell). This means that ASX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

ASX currently has a forward P/E ratio of 18.64, while NVMI has a forward P/E of 28.97. We also note that ASX has a PEG ratio of 0.63. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. NVMI currently has a PEG ratio of 1.69.

Another notable valuation metric for ASX is its P/B ratio of 2.11. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, NVMI has a P/B of 6.38.

These metrics, and several others, help ASX earn a Value grade of A, while NVMI has been given a Value grade of F.

ASX has seen stronger estimate revision activity and sports more attractive valuation metrics than NVMI, so it seems like value investors will conclude that ASX is the superior option right now.

Zacks Investment Research

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

ASE Technology (ASX) is a stock many investors are watching right now. ASX is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 12.86. This compares to its industry's average Forward P/E of 30.29. Over the past year, ASX's Forward P/E has been as high as 21.39 and as low as 11.49, with a median of 14.24.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. ASX has a P/S ratio of 1.17. This compares to its industry's average P/S of 3.19.

Finally, our model also underscores that ASX has a P/CF ratio of 6.99. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 26.08. Over the past year, ASX's P/CF has been as high as 9.14 and as low as 5.40, with a median of 7.24.

Value investors will likely look at more than just these metrics, but the above data helps show that ASE Technology is likely undervalued currently. And when considering the strength of its earnings outlook, ASX sticks out at as one of the market's strongest value stocks.

Zacks Investment Research

Technology stocks were declining premarket Thursday with the Technology Select Sector SPDR Fund down almost 1% and the SPDR S&P Semiconductor ETF 0.3% lower recently.

Microsoft shares fell by nearly 4% even after the company reported higher fiscal Q1 earnings and revenue.

ASE Technology Holding shares rose past 3% after the company reported higher Q3 earnings and revenue.

Meta Platforms shares were down more than 1% even after the company reported higher Q3 earnings and revenue.