Investors looking for stocks in the Automotive - Domestic sector might want to consider either Ford Motor Company (F) or Fox Factory Holding (FOXF). But which of these two stocks presents investors with the better value opportunity right now? Let's 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.
Ford Motor Company has a Zacks Rank of #2 (Buy), while Fox Factory Holding has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that F likely has seen a stronger improvement to its earnings outlook than FOXF has recently. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
F currently has a forward P/E ratio of 8.30, while FOXF has a forward P/E of 20.34. We also note that F has a PEG ratio of 1.33. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. FOXF currently has a PEG ratio of 1.86.
Another notable valuation metric for F is its P/B ratio of 1.37. 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, FOXF has a P/B of 3.81.
Based on these metrics and many more, F holds a Value grade of A, while FOXF has a Value grade of C.
F is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that F is likely the superior value option right now.
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Fox Factory Holding Corp. (FOXF) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
