FLEX vs. ROK: Which Stock Is the Better Value Option?

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 stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Flex has a Zacks Rank of #2 (Buy), while Rockwell Automation has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that FLEX likely has seen a stronger improvement to its earnings outlook than ROK has recently. But this is just one piece of the puzzle for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

FLEX currently has a forward P/E ratio of 20.12, while ROK has a forward P/E of 33.31. We also note that FLEX has a PEG ratio of 1.43. 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 2.89.

Another notable valuation metric for FLEX is its P/B ratio of 4.66. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ROK has a P/B of 11.98.

Based on these metrics and many more, FLEX holds a Value grade of B, while ROK has a Value grade of D.

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.

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This article originally published on Zacks Investment Research (zacks.com).

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