In This Article:
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 companies is the best option for those looking for undervalued stocks? Let's 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). 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 only part of the picture 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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
FLEX currently has a forward P/E ratio of 15.37, while ROK has a forward P/E of 29.72. We also note that FLEX has a PEG ratio of 2.09. 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 2.92.
Another notable valuation metric for FLEX is its P/B ratio of 2.88. 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, ROK has a P/B of 8.83.
Based on these metrics and many more, FLEX holds a Value grade of A, while ROK has a Value grade of C.
FLEX has seen stronger estimate revision activity and sports more attractive valuation metrics than ROK, so it seems like value investors will conclude that FLEX is the superior 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 Report