Investors looking for stocks in the Automotive - Foreign sector might want to consider either Volkswagen AG Unsponsored ADR (VWAGY) or Byd Co., Ltd. (BYDDY). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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, Volkswagen AG Unsponsored ADR is sporting a Zacks Rank of #2 (Buy), while Byd Co., Ltd. has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that VWAGY is likely seeing its earnings outlook improve to a greater extent. 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.
VWAGY currently has a forward P/E ratio of 5.01, while BYDDY has a forward P/E of 18.24. We also note that VWAGY has a PEG ratio of 0.99. 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. BYDDY currently has a PEG ratio of 2.47.
Another notable valuation metric for VWAGY is its P/B ratio of 0.26. 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, BYDDY has a P/B of 3.33.
These metrics, and several others, help VWAGY earn a Value grade of A, while BYDDY has been given a Value grade of C.
VWAGY has seen stronger estimate revision activity and sports more attractive valuation metrics than BYDDY, so it seems like value investors will conclude that VWAGY is the superior option right now.
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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.
