Investors looking for stocks in the Electronics - Miscellaneous Components sector might want to consider either Fabrinet (FN) or TE Connectivity (TEL). 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.
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 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 TE Connectivity 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 piece of the puzzle for value investors.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
FN currently has a forward P/E ratio of 12.69, while TEL has a forward P/E of 13.09. We also note that FN has a PEG ratio of 0.98. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. TEL currently has a PEG ratio of 1.20.
Another notable valuation metric for FN is its P/B ratio of 1.93. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, TEL has a P/B of 1.99.
Based on these metrics and many more, FN holds a Value grade of A, while TEL has a Value grade of C.
FN sticks out from TEL 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
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