Investors interested in stocks from the Automotive - Original Equipment sector have probably already heard of Visteon (VC) and Ferrari (RACE). 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.
Visteon has a Zacks Rank of #1 (Strong Buy), while Ferrari has a Zacks Rank of #2 (Buy) right now. Investors should feel comfortable knowing that VC likely has seen a stronger improvement to its earnings outlook than RACE 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.
VC currently has a forward P/E ratio of 14.38, while RACE has a forward P/E of 46.03. We also note that VC has a PEG ratio of 4.82. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. RACE currently has a PEG ratio of 5.18.
Another notable valuation metric for VC is its P/B ratio of 2.27. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, RACE has a P/B of 28.83.
Based on these metrics and many more, VC holds a Value grade of A, while RACE has a Value grade of D.
VC has seen stronger estimate revision activity and sports more attractive valuation metrics than RACE, so it seems like value investors will conclude that VC is the superior option right now.
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See This Stock Now for Free >>Visteon Corporation (VC) : Free Stock Analysis Report
Ferrari N.V. (RACE) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
