SMP vs. GPC: Which Stock Is the Better Value Option?
Investors interested in Automotive - Replacement Parts stocks are likely familiar with Standard Motor Products (SMP) and Genuine Parts (GPC). But which of these two companies is the best option for those looking for undervalued stocks? 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 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.
Right now, Standard Motor Products is sporting a Zacks Rank of #2 (Buy), while Genuine Parts has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that SMP likely has seen a stronger improvement to its earnings outlook than GPC has recently. 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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
SMP currently has a forward P/E ratio of 14.86, while GPC has a forward P/E of 15.84. We also note that SMP has a PEG ratio of 1.35. 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. GPC currently has a PEG ratio of 3.17.
Another notable valuation metric for SMP is its P/B ratio of 2.09. 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, GPC has a P/B of 3.58.
Based on these metrics and many more, SMP holds a Value grade of B, while GPC has a Value grade of C.
SMP 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 SMP is likely the superior value option right now.
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Standard Motor Products, Inc. (SMP): Free Stock Analysis Report
Genuine Parts Company (GPC): Free Stock Analysis Report
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