NYSE:STM: good value for what you're paying.

Discover STMICROELECTRONICS NV-NY SHS (NYSE:STM)—an undervalued stock our stock screener has picked out. NYSE:STM demonstrates solid fundamentals, including health and profitability, all while staying attractively priced. Let's explore the details.

How do we evaluate the Valuation for NYSE:STM?

ChartMill assigns a proprietary Valuation Rating to each stock. The score is computed by evaluating various valuation aspects, like price to earnings and free cash flow, both absolutely as relative to the market and industry. NYSE:STM was assigned a score of 7 for valuation:

• With a Price/Earnings ratio of 9.61, the valuation of STM can be described as very reasonable.
• Based on the Price/Earnings ratio, STM is valued cheaply inside the industry as 97.14% of the companies are valued more expensively.
• The average S&P500 Price/Earnings ratio is at 26.00. STM is valued rather cheaply when compared to this.
• The Price/Forward Earnings ratio is 11.11, which indicates a very decent valuation of STM.
• Based on the Price/Forward Earnings ratio, STM is valued cheaply inside the industry as 96.19% of the companies are valued more expensively.
• When comparing the Price/Forward Earnings ratio of STM to the average of the S&P500 Index (21.37), we can say STM is valued slightly cheaper.
• Based on the Enterprise Value to EBITDA ratio, STM is valued cheaply inside the industry as 95.24% of the companies are valued more expensively.
• STM's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. STM is cheaper than 79.05% of the companies in the same industry.
• STM has an outstanding profitability rating, which may justify a higher PE ratio.

Assessing Profitability for NYSE:STM

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NYSE:STM was assigned a score of 8 for profitability:

• STM has a Return On Assets of 17.88%. This is amongst the best in the industry. STM outperforms 85.71% of its industry peers.
• With an excellent Return On Equity value of 27.47%, STM belongs to the best of the industry, outperforming 84.76% of the companies in the same industry.
• Looking at the Return On Invested Capital, with a value of 25.26%, STM belongs to the top of the industry, outperforming 95.24% of the companies in the same industry.
• The Average Return On Invested Capital over the past 3 years for STM is significantly above the industry average of 11.61%.
• The last Return On Invested Capital (25.26%) for STM is above the 3 year average (17.26%), which is a sign of increasing profitability.
• With a decent Profit Margin value of 23.70%, STM is doing good in the industry, outperforming 79.05% of the companies in the same industry.
• STM's Profit Margin has improved in the last couple of years.
• Looking at the Operating Margin, with a value of 30.01%, STM belongs to the top of the industry, outperforming 88.57% of the companies in the same industry.
• STM's Operating Margin has improved in the last couple of years.
• STM's Gross Margin has improved in the last couple of years.

Health Examination for NYSE:STM

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NYSE:STM, the assigned 7 for health provides valuable insights:

• An Altman-Z score of 5.40 indicates that STM is not in any danger for bankruptcy at the moment.
• STM's Altman-Z score of 5.40 is fine compared to the rest of the industry. STM outperforms 61.90% of its industry peers.
• The Debt to FCF ratio of STM is 1.50, which is an excellent value as it means it would take STM, only 1.50 years of fcf income to pay off all of its debts.
• The Debt to FCF ratio of STM (1.50) is better than 73.33% of its industry peers.
• STM has a Debt/Equity ratio of 0.11. This is a healthy value indicating a solid balance between debt and equity.
• A Current Ratio of 2.15 indicates that STM has no problem at all paying its short term obligations.
• The current and quick ratio evaluation for STM is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

ChartMill's Evaluation of Growth

ChartMill employs its own Growth Rating system for all stocks. This score, ranging from 0 to 10, is derived by evaluating different growth factors, such as EPS and revenue growth, taking into account both past performance and future projections. NYSE:STM has earned a 6 for growth:

• The Earnings Per Share has grown by an impressive 52.63% over the past year.
• STM shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 34.84% yearly.
• The Revenue has grown by 22.51% in the past year. This is a very strong growth!
• STM shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.08% yearly.

More Decent Value stocks can be found in our Decent Value screener.

Our latest full fundamental report of STM contains the most current fundamental analsysis.

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.