Investors looking for stocks in the Electronics - Miscellaneous Products sector might want to consider either Flex (FLEX) or KLA (KLAC). 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Flex has a Zacks Rank of #2 (Buy), while KLA has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that FLEX has an improving earnings 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
FLEX currently has a forward P/E ratio of 20.61, while KLAC has a forward P/E of 34.65. We also note that FLEX has a PEG ratio of 1.55. 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. KLAC currently has a PEG ratio of 3.34.
Another notable valuation metric for FLEX is its P/B ratio of 4.69. 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, KLAC has a P/B of 32.13.
Based on these metrics and many more, FLEX holds a Value grade of B, while KLAC has a Value grade of D.
FLEX is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that FLEX is likely the superior value option right now.
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Flex Ltd. (FLEX): Free Stock Analysis Report KLA Corporation (KLAC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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