When you look at NASDAQ:FLEX, it's hard to ignore the strong fundamentals, especially considering its likely undervaluation.

Last update: Jul 23, 2024

Our stock screener has spotted FLEX LTD (NASDAQ:FLEX) as an undervalued stock with solid fundamentals. NASDAQ:FLEX shows decent health and profitability. At the same time it remains remains attractively priced. We'll dive into each aspect below.

Evaluating Valuation: NASDAQ:FLEX

ChartMill employs its own Valuation Rating system for all stocks. This score, ranging from 0 to 10, is determined by evaluating different valuation factors, including price to earnings and free cash flow, both in absolute terms and relative to the market and industry. NASDAQ:FLEX has earned a 7 for valuation:

A Price/Earnings ratio of 11.65 indicates a reasonable valuation of FLEX.
90.55% of the companies in the same industry are more expensive than FLEX, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of FLEX to the average of the S&P500 Index (29.08), we can say FLEX is valued rather cheaply.
88.19% of the companies in the same industry are more expensive than FLEX, based on the Price/Forward Earnings ratio.
FLEX's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 20.74.
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of FLEX indicates a rather cheap valuation: FLEX is cheaper than 95.28% of the companies listed in the same industry.
FLEX's Price/Free Cash Flow ratio is rather cheap when compared to the industry. FLEX is cheaper than 84.25% of the companies in the same industry.
FLEX has an outstanding profitability rating, which may justify a higher PE ratio.

Analyzing Profitability Metrics

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NASDAQ:FLEX scores a 8 out of 10:

With an excellent Return On Assets value of 8.86%, FLEX belongs to the best of the industry, outperforming 88.98% of the companies in the same industry.
FLEX has a better Return On Equity (30.37%) than 96.85% of its industry peers.
FLEX has a Return On Invested Capital of 17.42%. This is amongst the best in the industry. FLEX outperforms 96.06% of its industry peers.
The last Return On Invested Capital (17.42%) for FLEX is above the 3 year average (8.78%), which is a sign of increasing profitability.
FLEX has a Profit Margin of 3.35%. This is in the better half of the industry: FLEX outperforms 63.78% of its industry peers.
In the last couple of years the Profit Margin of FLEX has grown nicely.
FLEX has a better Operating Margin (4.43%) than 61.42% of its industry peers.
FLEX's Operating Margin has improved in the last couple of years.
In the last couple of years the Gross Margin of FLEX has grown nicely.

What does the Health looks like for NASDAQ:FLEX

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NASDAQ:FLEX, the assigned 5 for health provides valuable insights:

FLEX has an Altman-Z score of 3.91. This indicates that FLEX is financially healthy and has little risk of bankruptcy at the moment.
FLEX's Altman-Z score of 3.91 is fine compared to the rest of the industry. FLEX outperforms 66.93% of its industry peers.
FLEX has a better Debt to FCF ratio (4.10) than 62.20% of its industry peers.

How do we evaluate the Growth for NASDAQ:FLEX?

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NASDAQ:FLEX has achieved a 5 out of 10:

Measured over the past years, FLEX shows a quite strong growth in Earnings Per Share. The EPS has been growing by 17.29% on average per year.
Looking at the last year, FLEX shows a very strong growth in Revenue. The Revenue has grown by 59.25%.
FLEX is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 8.90% yearly.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

Every day, new Decent Value stocks can be found on ChartMill in our Decent Value screener.

For an up to date full fundamental analysis you can check the fundamental report of FLEX

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.