Investors interested in stocks from the Automotive - Original Equipment sector have probably already heard of Aptiv PLC (APTV) and Modine (MOD). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Aptiv PLC has a Zacks Rank of #2 (Buy), while Modine has a Zacks Rank of #3 (Hold) right now. This means that APTV's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
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.
APTV currently has a forward P/E ratio of 10.07, while MOD has a forward P/E of 35.11. We also note that APTV has a PEG ratio of 0.80. 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. MOD currently has a PEG ratio of 1.03.
Another notable valuation metric for APTV is its P/B ratio of 1.77. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, MOD has a P/B of 8.04.
These metrics, and several others, help APTV earn a Value grade of A, while MOD has been given a Value grade of C.
APTV has seen stronger estimate revision activity and sports more attractive valuation metrics than MOD, so it seems like value investors will conclude that APTV is the superior option right now.
Zacks Names #1 Semiconductor Stock
This under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.
See This Stock Now for Free >>Aptiv PLC (APTV) : Free Stock Analysis Report
Modine Manufacturing Company (MOD) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
