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

Investors looking for stocks in the Electronics - Miscellaneous Products sector might want to consider either Flex (FLEX) or Garmin (GRMN). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Flex is sporting a Zacks Rank of #2 (Buy), while Garmin has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that FLEX is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

FLEX currently has a forward P/E ratio of 17.82, while GRMN has a forward P/E of 26.87. We also note that FLEX has a PEG ratio of 1.71. 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. GRMN currently has a PEG ratio of 2.41.

Another notable valuation metric for FLEX is its P/B ratio of 3.96. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, GRMN has a P/B of 5.06.

These metrics, and several others, help FLEX earn a Value grade of A, while GRMN has been given a Value grade of C.

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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