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FLEX vs. GRMN: Which Stock Should Value Investors Buy Now?

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Zacks Equity Research
·2 min read
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Investors interested in stocks from the Electronics - Miscellaneous Products sector have probably already heard of Flex (FLEX) and Garmin (GRMN). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Currently, Flex has a Zacks Rank of #2 (Buy), while Garmin has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that FLEX is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

FLEX currently has a forward P/E ratio of 11.97, while GRMN has a forward P/E of 22.96. We also note that FLEX has a PEG ratio of 0.90. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. GRMN currently has a PEG ratio of 3.38.

Another notable valuation metric for FLEX is its P/B ratio of 2.54. 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. By comparison, GRMN has a P/B of 4.16.

These are just a few of the metrics contributing to FLEX's Value grade of B and GRMN's Value grade of C.

FLEX has seen stronger estimate revision activity and sports more attractive valuation metrics than GRMN, so it seems like value investors will conclude that FLEX is the superior option right now.


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Flex Ltd. (FLEX) : Free Stock Analysis Report
 
Garmin Ltd. (GRMN) : Free Stock Analysis Report
 
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