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FN vs. LFUS: Which Stock Is the Better Value Option?

Zacks Equity Research
Wall Street finished in the green reversing its five-day negative trend on Thursday following news that United States and China have ramped up their efforts to resolve lingering trade disputes

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 companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Fabrinet is sporting a Zacks Rank of #2 (Buy), while Littelfuse has a Zacks Rank of #3 (Hold). 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 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.

FN currently has a forward P/E ratio of 13.52, while LFUS has a forward P/E of 22.88. We also note that FN has a PEG ratio of 1.13. 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. LFUS currently has a PEG ratio of 1.91.

Another notable valuation metric for FN is its P/B ratio of 2.18. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, LFUS has a P/B of 3.74.

Based on these metrics and many more, FN holds a Value grade of A, while LFUS has a Value grade of C.

FN sticks out from LFUS in both our Zacks Rank and Style Scores models, so value investors will likely feel that FN is the better option right now.


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Fabrinet (FN) : Free Stock Analysis Report
 
Littelfuse, Inc. (LFUS) : Free Stock Analysis Report
 
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