Should Value Investors Buy Fabrinet (FN) Stock?
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 stock to keep an eye on is Fabrinet (FN). FN is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 12.94, which compares to its industry's average of 21.97. Over the past 52 weeks, FN's Forward P/E has been as high as 16.85 and as low as 10.54, with a median of 13.86.
We also note that FN holds a PEG ratio of 1. 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. FN's PEG compares to its industry's average PEG of 1.83. Over the past 52 weeks, FN's PEG has been as high as 1.30 and as low as 0.81, with a median of 1.07.
Investors should also recognize that FN has a P/B ratio of 2.12. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 2.56. FN's P/B has been as high as 2.76 and as low as 1.89, with a median of 2.34, over the past year.
These are only a few of the key metrics included in Fabrinet's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, FN looks like an impressive value stock at the moment.
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