Investors interested in Automotive - Domestic stocks are likely familiar with Paccar (PCAR) and 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both Paccar and Fox Factory Holding are holding a Zacks Rank of # 1 (Strong Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.
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.
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.
PCAR currently has a forward P/E ratio of 11.59, while FOXF has a forward P/E of 32.56. We also note that PCAR has a PEG ratio of 1.07. 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. FOXF currently has a PEG ratio of 1.94.
Another notable valuation metric for PCAR is its P/B ratio of 2.80. 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 9.46.
These metrics, and several others, help PCAR earn a Value grade of A, while FOXF has been given a Value grade of F.
Both PCAR and FOXF are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PCAR is the superior value option right now.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.