Investors looking for stocks in the Electronics - Miscellaneous Products sector might want to consider either Flex (FLEX) or Rockwell Automation (ROK). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Flex has a Zacks Rank of #2 (Buy), while Rockwell Automation has a Zacks Rank of #3 (Hold). This means that FLEX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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 20.18, while ROK has a forward P/E of 34.22. We also note that FLEX has a PEG ratio of 1.44. 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. ROK currently has a PEG ratio of 2.91.
Another notable valuation metric for FLEX is its P/B ratio of 4.62. 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, ROK has a P/B of 12.27.
These metrics, and several others, help FLEX earn a Value grade of B, while ROK has been given a Value grade of D.
FLEX sticks out from ROK in both our Zacks Rank and Style Scores models, so value investors will likely feel that FLEX is the better option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Flex Ltd. (FLEX): Free Stock Analysis Report Rockwell Automation, Inc. (ROK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
