We've been asking ourselves recently if the market has placed a fair valuation on Qorvo. Let's dive into some of the fundamental values of this large-cap Industrials company to determine if there might be an opportunity here for value-minded investors.
Qorvo, Inc. supplies semiconductor solutions for consumer electronics, smart home/IoT, automotive, EVs, battery-powered appliances, network infrastructure, healthcare, and aerospace/defense markets in the United States, China, other Asian countries, Taiwan, and Europe. The company belongs to the Industrials sector, which has an average price to earnings (P/E) ratio of 20.49 and an average price to book (P/B) ratio of 3.78. In contrast, Qorvo has a trailing 12 month P/E ratio of 21.4 and a P/B ratio of 2.2.
P/B ratios are calculated by dividing the company's market value by its equity's book value. Equity refers to all of the company's assets minus its liabilities. Traditionally, a P/B ratio of around 1 shows that a company is fairly valued, but owing to consistently higher valuations in the modern era, investors generally compare against sector averages.
Qorvo's PEG ratio is 1.61, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
