FLEX or GRMN: Which Is the Better Value Stock Right Now?

Investors interested in stocks from the Electronics - Miscellaneous Products sector have probably already heard of Flex (FLEX) and Garmin (GRMN). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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.

Currently, Flex has a Zacks Rank of #2 (Buy), while Garmin has a Zacks Rank of #4 (Sell). 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 also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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 14.46, while GRMN has a forward P/E of 25.20. We also note that FLEX has a PEG ratio of 1.60. 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. GRMN currently has a PEG ratio of 2.22.

Another notable valuation metric for FLEX is its P/B ratio of 3.23. 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, GRMN has a P/B of 4.72.

These are just a few of the metrics contributing to FLEX's Value grade of A and GRMN's Value grade of D.

FLEX has seen stronger estimate revision activity and sports more attractive valuation metrics than GRMN, so it seems like value investors will conclude that FLEX is the superior option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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