Investors with an interest in Automotive - Domestic stocks have likely encountered both Paccar (PCAR) and Fox Factory Holding (FOXF). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Paccar has a Zacks Rank of #2 (Buy), while Fox Factory Holding has a Zacks Rank of #3 (Hold). This means that PCAR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
PCAR currently has a forward P/E ratio of 10.27, while FOXF has a forward P/E of 28.50. We also note that PCAR has a PEG ratio of 0.95. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. FOXF currently has a PEG ratio of 1.70.
Another notable valuation metric for PCAR is its P/B ratio of 2.49. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, FOXF has a P/B of 8.28.
These are just a few of the metrics contributing to PCAR's Value grade of A and FOXF's Value grade of D.
PCAR sticks out from FOXF in both our Zacks Rank and Style Scores models, so value investors will likely feel that PCAR is the better option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportPACCAR Inc. (PCAR): Free Stock Analysis ReportFox Factory Holding Corp. (FOXF): Free Stock Analysis ReportTo read this article on Zacks.com click here.