Investors looking for stocks in the Automotive - Replacement Parts sector might want to consider either SPX (SPXC) or CarGurus (CARG). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, both SPX and CarGurus are sporting a Zacks Rank of # 2 (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. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
SPXC currently has a forward P/E ratio of 15.50, while CARG has a forward P/E of 60.35. We also note that SPXC has a PEG ratio of 1.55. 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. CARG currently has a PEG ratio of 1.68.
Another notable valuation metric for SPXC is its P/B ratio of 3.60. 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, CARG has a P/B of 9.71.
Based on these metrics and many more, SPXC holds a Value grade of B, while CARG has a Value grade of D.
Both SPXC and CARG are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SPXC is the superior value option right now.
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SPX Corporation (SPXC): 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.