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Is Fabrinet (FN) Stock Undervalued Right Now?

Zacks Equity Research

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Fabrinet (FN) is a stock many investors are watching right now. FN is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 14.24, which compares to its industry's average of 22.04. Over the past year, FN's Forward P/E has been as high as 16.85 and as low as 10.54, with a median of 14.04.

We also note that FN holds a PEG ratio of 1.10. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. FN's PEG compares to its industry's average PEG of 1.83. Over the past 52 weeks, FN's PEG has been as high as 1.30 and as low as 0.81, with a median of 1.08.

Another notable valuation metric for FN is its P/B ratio of 2.32. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 2.56. Over the past year, FN's P/B has been as high as 2.76 and as low as 1.89, with a median of 2.41.

These are only a few of the key metrics included in Fabrinet's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, FN looks like an impressive value stock at the moment.


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