Investors interested in stocks from the Automotive - Original Equipment sector have probably already heard of Oshkosh (OSK) and Autoliv (ALV). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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.
Currently, Oshkosh has a Zacks Rank of #1 (Strong Buy), while Autoliv has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that OSK has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
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.
OSK currently has a forward P/E ratio of 12.98, while ALV has a forward P/E of 21.49. We also note that OSK has a PEG ratio of 0.71. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ALV currently has a PEG ratio of 2.23.
Another notable valuation metric for OSK is its P/B ratio of 2.35. 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, ALV has a P/B of 3.16.
Based on these metrics and many more, OSK holds a Value grade of A, while ALV has a Value grade of C.
OSK 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 OSK is likely the superior value option right now.