Investors should take notice of NYSE:STM—it offers a great deal for the fundamentals it presents.

Last update: Jul 23, 2024

STMICROELECTRONICS NV-NY SHS (NYSE:STM) has caught the attention of our stock screener as a great value stock. NYSE:STM excels in profitability, solvency, and liquidity, all while being very reasonably priced. Let's delve into the details.

Valuation Examination for NYSE:STM

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of NYSE:STM, the assigned 7 reflects its valuation:

Based on the Price/Earnings ratio of 10.77, the valuation of STM can be described as reasonable.
Based on the Price/Earnings ratio, STM is valued cheaply inside the industry as 95.41% of the companies are valued more expensively.
STM is valuated cheaply when we compare the Price/Earnings ratio to 29.08, which is the current average of the S&P500 Index.
STM's Price/Forward Earnings ratio is rather cheap when compared to the industry. STM is cheaper than 90.83% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 20.74, STM is valued a bit cheaper.
97.25% of the companies in the same industry are more expensive than STM, based on the Enterprise Value to EBITDA ratio.
85.32% of the companies in the same industry are more expensive than STM, based on the Price/Free Cash Flow ratio.
The excellent profitability rating of STM may justify a higher PE ratio.

How do we evaluate the Profitability for NYSE:STM?

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NYSE:STM, the assigned 9 is noteworthy for profitability:

STM has a better Return On Assets (17.88%) than 92.66% of its industry peers.
STM's Return On Equity of 27.47% is amongst the best of the industry. STM outperforms 88.07% of its industry peers.
STM's Return On Invested Capital of 25.82% is amongst the best of the industry. STM outperforms 95.41% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for STM is significantly above the industry average of 10.84%.
The last Return On Invested Capital (25.82%) for STM is above the 3 year average (20.86%), which is a sign of increasing profitability.
Looking at the Profit Margin, with a value of 23.70%, STM belongs to the top of the industry, outperforming 82.57% 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 89.91% of the companies in the same industry.
STM's Operating Margin has improved in the last couple of years.
In the last couple of years the Gross Margin of STM has grown nicely.

Assessing Health Metrics for NYSE:STM

Every stock is evaluated by ChartMill, receiving a Health Rating on a scale of 0 to 10. This assessment considers different health aspects, including liquidity and solvency, both in absolute terms and relative to industry peers. NYSE:STM has achieved a 6 out of 10:

An Altman-Z score of 5.20 indicates that STM is not in any danger for bankruptcy at the moment.
STM has a debt to FCF ratio of 1.50. This is a very positive value and a sign of high solvency as it would only need 1.50 years to pay back of all of its debts.
STM has a better Debt to FCF ratio (1.50) than 70.64% 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.
STM has a Current Ratio of 2.15. This indicates that STM is financially healthy and has no problem in meeting its short term obligations.

Growth Assessment of NYSE:STM

Every stock receives a Growth Rating from ChartMill, ranging from 0 to 10. This rating assesses various growth aspects, including historical and projected EPS and revenue growth. NYSE:STM boasts a 4 out of 10:

Measured over the past years, STM shows a very strong growth in Earnings Per Share. The EPS has been growing by 25.72% on average per year.
The Revenue has been growing by 12.33% on average over the past years. This is quite good.

Our Decent Value screener lists more Decent Value stocks and is updated daily.

For an up to date full fundamental analysis you can check the fundamental report of STM

Disclaimer

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.