Investors interested in stocks from the Electronics - Miscellaneous Components sector have probably already heard of Fabrinet (FN) and Littelfuse (LFUS). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Fabrinet has a Zacks Rank of #2 (Buy), while Littelfuse has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that FN has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
FN currently has a forward P/E ratio of 15.40, while LFUS has a forward P/E of 19.91. We also note that FN has a PEG ratio of 1.18. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. LFUS currently has a PEG ratio of 1.66.
Another notable valuation metric for FN is its P/B ratio of 2.56. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, LFUS has a P/B of 2.85.
These are just a few of the metrics contributing to FN's Value grade of B and LFUS's Value grade of C.
FN has seen stronger estimate revision activity and sports more attractive valuation metrics than LFUS, so it seems like value investors will conclude that FN is the superior option right now.
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Fabrinet (FN) : Free Stock Analysis Report
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