Investors interested in Automotive - Domestic stocks are likely familiar with Blue Bird (BLBD) and Tesla (TSLA). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Blue Bird has a Zacks Rank of #1 (Strong Buy), while Tesla has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BLBD has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
BLBD currently has a forward P/E ratio of 12.87, while TSLA has a forward P/E of 188.19. We also note that BLBD has a PEG ratio of 2.47. 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. TSLA currently has a PEG ratio of 9.63.
Another notable valuation metric for BLBD is its P/B ratio of 6.47. 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, TSLA has a P/B of 18.
These metrics, and several others, help BLBD earn a Value grade of A, while TSLA has been given a Value grade of F.
BLBD stands above TSLA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BLBD is the superior value option right now.
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Tesla, Inc. (TSLA) : 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.
