Investors with an interest in Electronics - Miscellaneous Products stocks have likely encountered both Flex (FLEX) and Rockwell Automation (ROK). But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, both Flex and Rockwell Automation are sporting a Zacks Rank of #2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
FLEX currently has a forward P/E ratio of 18.58, while ROK has a forward P/E of 31.74. We also note that FLEX has a PEG ratio of 1.40. 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. ROK currently has a PEG ratio of 2.57.
Another notable valuation metric for FLEX is its P/B ratio of 4.28. 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, ROK has a P/B of 11.28.
These are just a few of the metrics contributing to FLEX's Value grade of B and ROK's Value grade of D.
Both FLEX and ROK are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that FLEX is the superior value option right now.
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Flex Ltd. (FLEX): Free Stock Analysis Report Rockwell Automation, Inc. (ROK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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