Investors interested in Electronics - Miscellaneous Components stocks are likely familiar with Zagg (ZAGG) and Fabrinet (FN). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 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.
Right now, Zagg is sporting a Zacks Rank of #1 (Strong Buy), while Fabrinet has a Zacks Rank of #3 (Hold). This means that ZAGG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
ZAGG currently has a forward P/E ratio of 7.04, while FN has a forward P/E of 13.91. We also note that ZAGG has a PEG ratio of 0.94. 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 currently has a PEG ratio of 1.07.
Another notable valuation metric for ZAGG is its P/B ratio of 2.02. 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, FN has a P/B of 2.44.
These metrics, and several others, help ZAGG earn a Value grade of A, while FN has been given a Value grade of C.
ZAGG sticks out from FN in both our Zacks Rank and Style Scores models, so value investors will likely feel that ZAGG is the better option right now.
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ZAGG Inc (ZAGG) : Free Stock Analysis Report
Fabrinet (FN) : Free Stock Analysis Report
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