SPXC vs. CARG: Which Stock Is the Better Value Option?
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 companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
SPX and CarGurus are both sporting a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one factor that value investors are interested in.
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.
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.
SPXC currently has a forward P/E ratio of 15.56, while CARG has a forward P/E of 69.45. We also note that SPXC has a PEG ratio of 1.56. 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. CARG currently has a PEG ratio of 2.17.
Another notable valuation metric for SPXC is its P/B ratio of 3.63. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, CARG has a P/B of 11.69.
Based on these metrics and many more, SPXC holds a Value grade of A, while CARG has a Value grade of F.
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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.