Don't overlook NYSE:STM—it's a hidden gem with strong fundamentals and an attractive price tag.

Last update: Jan 2, 2025

Uncover the potential of STMICROELECTRONICS NV-NY SHS (NYSE:STM) as our stock screener's choice for an undervalued stock. NYSE:STM maintains a strong financial position and offers an appealing valuation. We'll delve into the specifics below.

Exploring NYSE:STM's Valuation

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:

STM is valuated reasonably with a Price/Earnings ratio of 10.28.
97.20% of the companies in the same industry are more expensive than STM, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 27.17, STM is valued rather cheaply.
With a Price/Forward Earnings ratio of 11.21, the valuation of STM can be described as very reasonable.
94.39% of the companies in the same industry are more expensive than STM, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of STM to the average of the S&P500 Index (23.59), we can say STM is valued rather cheaply.
STM's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. STM is cheaper than 99.07% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, STM is valued a bit cheaper than 77.57% of the companies in the same industry.
The excellent profitability rating of STM may justify a higher PE ratio.

Understanding NYSE:STM's Profitability

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 Return On Assets of 20.62%. This is amongst the best in the industry. STM outperforms 96.26% of its industry peers.
STM has a Return On Equity of 29.96%. This is amongst the best in the industry. STM outperforms 92.52% of its industry peers.
Looking at the Return On Invested Capital, with a value of 24.36%, STM belongs to the top of the industry, outperforming 95.33% 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 11.13%.
The 3 year average ROIC (20.86%) for STM is below the current ROIC(24.36%), indicating increased profibility in the last year.
STM's Profit Margin of 22.25% is amongst the best of the industry. STM outperforms 82.24% of its industry peers.
In the last couple of years the Profit Margin of STM has grown nicely.
The Operating Margin of STM (23.58%) is better than 81.31% of its industry peers.
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 Analysis for NYSE:STM

ChartMill utilizes a Health Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of liquidity and solvency ratios, both in absolute terms and in comparison to industry peers. NYSE:STM has earned a 6 out of 10:

An Altman-Z score of 4.32 indicates that STM is not in any danger for bankruptcy at the moment.
The Debt to FCF ratio of STM is 3.81, which is a good value as it means it would take STM, 3.81 years of fcf income to pay off all of its debts.
STM's Debt to FCF ratio of 3.81 is fine compared to the rest of the industry. STM outperforms 62.62% of its industry peers.
A Debt/Equity ratio of 0.07 indicates that STM is not too dependend on debt financing.
STM has a Current Ratio of 2.27. This indicates that STM is financially healthy and has no problem in meeting its short term obligations.

Analyzing Growth Metrics

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NYSE:STM has achieved 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.
Measured over the past years, STM shows a quite strong growth in Revenue. The Revenue has been growing by 12.33% on average per year.

Every day, new Decent Value stocks can be found on ChartMill in our Decent Value screener.

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.