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FN vs. TEL: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Electronics - Miscellaneous Components sector have probably already heard of Fabrinet (FN - Free Report) and TE Connectivity (TEL - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Both Fabrinet and TE Connectivity have a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.

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.

FN currently has a forward P/E ratio of 14.78, while TEL has a forward P/E of 16.63. We also note that FN has a PEG ratio of 1.14. 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. TEL currently has a PEG ratio of 1.52.

Another notable valuation metric for FN is its P/B ratio of 2.25. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, TEL has a P/B of 2.73.

These are just a few of the metrics contributing to FN's Value grade of A and TEL's Value grade of C.

Both FN and TEL are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that FN is the superior value option right now.


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