FOXF or TSLA: Which Is the Better Value Stock Right Now?
Investors interested in Automotive - Domestic stocks are likely familiar with Fox Factory Holding (FOXF) 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.
Fox Factory Holding has a Zacks Rank of #2 (Buy), while Tesla has a Zacks Rank of #3 (Hold) right now. This means that FOXF's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
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.
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.
FOXF currently has a forward P/E ratio of 13.56, while TSLA has a forward P/E of 191.01. We also note that FOXF has a PEG ratio of 0.60. 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. TSLA currently has a PEG ratio of 8.45.
Another notable valuation metric for FOXF is its P/B ratio of 1.32. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, TSLA has a P/B of 15.45.
These metrics, and several others, help FOXF earn a Value grade of A, while TSLA has been given a Value grade of D.
FOXF sticks out from TSLA in both our Zacks Rank and Style Scores models, so value investors will likely feel that FOXF is the better option right now.
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This article originally published on Zacks Investment Research (zacks.com).
