#ambarella inc.

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Ambarella Is Overpriced: Better Alternatives (NASDAQ:AMBA)

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Ambarella Inc (NASDAQ:AMBA) [Trend Analysis] has been in the vision of many investors lately having risen over 200% in the last year. So is it too late for investors to get in this, that is, is AMBA overpriced?

Price to Earnings

Ambarella (NASDAQ:AMBA) according to Zacks is trading on a forward price to earnings multiple of a whopping 41.6. With the market trading on an average forward Price to Earnings multiple of approximately 19, it is easy to see on this basis how overpriced the stock has become. For those investors who will look at it and say this only considers one earnings period ahead and there is more growth for AMBA in the coming years ahead that should be recognized, we analyze this below.

Growth

After constant upward revisions in earnings for Ambarella, growth is being revised upwards for this company. Zacks has estimated growth per year for the next 5 years of 22.5% for AMBA. The best way to assess if the stock is well priced from a longer term growth perspective is to use the price to earnings to growth (PEG) ratio. Using the forward PE above and the 5 year growth results in a PEG ratio of 1.85 for Ambarella. The general rule of thumb is if a PEG is under 1, a stock is deemed overpriced and if between 1 and 2, it is fairly priced. So from a longer term growth perspective AMBA appears fairly priced.

Alternatives

There are many other semi conductor manufacturers out there and based on the above it means there certainly are better alternatives in regard to pricing. These include:

Avago Technologies (NASDAQ:AVGO) – trading on a PEG ratio of 0.94

Cirrus Logic (NASDAQ:CRUS) – trading on a PEG ratio of 0.83.

Of course some investors may think the growth prospects for Ambarella Inc (NASDAQ:AMBA) are higher than analyst consensus estimates and that the company is a safer bet than others. But it is certainly worth considering alternatives at current pricing.

[stockmarketsdaily]

New Post has been published on Stock Markets Daily

New Post has been published on http://www.stockmarketsdaily.com/ambarella-is-overpriced-better-alternatives-nasdaqamba/11817/

Ambarella Is Overpriced: Better Alternatives (NASDAQ:AMBA)

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Ambarella Inc (NASDAQ:AMBA) [Trend Analysis] has been in the vision of many investors lately having risen over 200% in the last year. So is it too late for investors to get in this, that is, is AMBA overpriced?

Price to Earnings

Ambarella (NASDAQ:AMBA) according to Zacks is trading on a forward price to earnings multiple of a whopping 41.6. With the market trading on an average forward Price to Earnings multiple of approximately 19, it is easy to see on this basis how overpriced the stock has become. For those investors who will look at it and say this only considers one earnings period ahead and there is more growth for AMBA in the coming years ahead that should be recognized, we analyze this below.

Growth

After constant upward revisions in earnings for Ambarella, growth is being revised upwards for this company. Zacks has estimated growth per year for the next 5 years of 22.5% for AMBA. The best way to assess if the stock is well priced from a longer term growth perspective is to use the price to earnings to growth (PEG) ratio. Using the forward PE above and the 5 year growth results in a PEG ratio of 1.85 for Ambarella. The general rule of thumb is if a PEG is under 1, a stock is deemed overpriced and if between 1 and 2, it is fairly priced. So from a longer term growth perspective AMBA appears fairly priced.

Alternatives

There are many other semi conductor manufacturers out there and based on the above it means there certainly are better alternatives in regard to pricing. These include:

Avago Technologies (NASDAQ:AVGO) – trading on a PEG ratio of 0.94

Cirrus Logic (NASDAQ:CRUS) – trading on a PEG ratio of 0.83.

Of course some investors may think the growth prospects for Ambarella Inc (NASDAQ:AMBA) are higher than analyst consensus estimates and that the company is a safer bet than others. But it is certainly worth considering alternatives at current pricing.

[stockmarketsdaily]

New Post has been published on Stock Markets Daily

New Post has been published on http://www.stockmarketsdaily.com/big-mover-ambarella-inc-nasdaqamba/9296/

Big Mover: Value Look Ambarella, Inc.? (NASDAQ:AMBA)

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We look at Ambarella, Inc. (NASDAQ:AMBA) a company in the Semiconductor Equipment & Materials industry getting a lot of attention at the moment, to assess if it provides value for investors considering buying or selling it. Currently Ambarella, Inc. is trading at $50.71 after moving down -8.08% in the previous day of trading.

AMBA is trading with a trailing 12 month P/E multiple of 42.61 and an estimated forward P/E multiple of 25.79. The stock has an estimated 5 year annual growth of 21.60% and a PEG multiple of 1.97.

Rather than the usual Price to Earnings (P/E) multiple method, we use a slightly different method to assess if Ambarella, Inc. is potentially a value buy for investors, the PEG ratio (P/E to growth). This PEG multiple takes into account the expected long term growth in earnings of the company rather than merely the growth for one earnings period ahead as forward P/E does.

That is to say, P/E simply doesn’t account for the long term prospects of AMBA. As a rule of thumb, a stock with a PEG of between 0 and 1 is usually considered to be underpriced, between 1 and 2 to be at fair value and over 2 to be overpriced. Based on the PEG ratio of AMBA being 1.97, we consider Ambarella, Inc. to likely be priced at fair value.

This analysis means that value buyers who do not currently hold Ambarella, Inc. (NASDAQ:AMBA) should probably look for better value alternatives and investors currently holding the stock should either continue to hold or sell and look for alternatives.

The mean analyst 12 month target price for Ambarella, Inc. (NASDAQ:AMBA) is currently $59.17 or 16.68% above the current price. Additionally, the stock has been as high as $63.20 and as low as $21.60 in the last 52 weeks. Analysts are estimating that AMBA will report earnings per share of $0.43 next quarter.