While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company value investors might notice is Fabrinet (FN). FN is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 16.21 right now. For comparison, its industry sports an average P/E of 22.08. Over the last 12 months, FN's Forward P/E has been as high as 16.85 and as low as 10.54, with a median of 13.89.
We also note that FN holds a PEG ratio of 1.25. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. FN's industry has an average PEG of 1.83 right now. Within the past year, FN's PEG has been as high as 1.30 and as low as 0.81, with a median of 1.07.
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.