Investors interested in Automotive - Original Equipment stocks are likely familiar with AB Volvo (VLVLY) and Modine (MOD). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
AB Volvo has a Zacks Rank of #2 (Buy), while Modine has a Zacks Rank of #4 (Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that VLVLY is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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.
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.
VLVLY currently has a forward P/E ratio of 10.60, while MOD has a forward P/E of 25.15. We also note that VLVLY has a PEG ratio of 0.63. 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. MOD currently has a PEG ratio of 0.74.
Another notable valuation metric for VLVLY is its P/B ratio of 3.26. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, MOD has a P/B of 6.44.
Based on these metrics and many more, VLVLY holds a Value grade of A, while MOD has a Value grade of C.
VLVLY 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 VLVLY is likely the superior value option right now.
Check Out These Stocks Before They Report Earnings (Free Report)
A stock can jump +10-20% in a single day after a positive earnings surprise. What if you could get in early on those stocks? It could be the "holy grail" of stock picking for investors.
Zacks' new special report is designed to do exactly that. It reveals 5 promising stocks experts predict will crush earnings estimates and skyrocket in price.
Download Earnings Season Profit Secrets today, absolutely free.AB Volvo (VLVLY) : Free Stock Analysis Report
Modine Manufacturing Company (MOD) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
