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Is Fabrinet (FN) Stock Undervalued Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Fabrinet (FN - Free Report) is a stock many investors are watching right now. FN is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 14.30. This compares to its industry's average Forward P/E of 19.02. Over the past 52 weeks, FN's Forward P/E has been as high as 15.68 and as low as 10.92, with a median of 13.45.

Investors should also note that FN holds a PEG ratio of 1.10. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. FN's PEG compares to its industry's average PEG of 1.57. Over the last 12 months, FN's PEG has been as high as 1.21 and as low as 0.91, with a median of 1.05.

Another notable valuation metric for FN is its P/B ratio of 2.56. 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. This company's current P/B looks solid when compared to its industry's average P/B of 2.92. Within the past 52 weeks, FN's P/B has been as high as 2.76 and as low as 1.76, with a median of 2.36.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. FN has a P/S ratio of 1.31. This compares to its industry's average P/S of 1.47.

Value investors will likely look at more than just these metrics, but the above data helps show that Fabrinet is likely undervalued currently. And when considering the strength of its earnings outlook, FN sticks out at as one of the market's strongest value stocks.




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