Investors interested in stocks from the Automotive - Original Equipment sector have probably already heard of BorgWarner (BWA) and Gentex (GNTX). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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.
BorgWarner and Gentex are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This means that BWA's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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.
BWA currently has a forward P/E ratio of 8.69, while GNTX has a forward P/E of 17.72. We also note that BWA has a PEG ratio of 0.32. 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. GNTX currently has a PEG ratio of 1.28.
Another notable valuation metric for BWA is its P/B ratio of 1.22. 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, GNTX has a P/B of 3.11.
These metrics, and several others, help BWA earn a Value grade of A, while GNTX has been given a Value grade of C.
BWA sticks out from GNTX in both our Zacks Rank and Style Scores models, so value investors will likely feel that BWA is the better option right now.
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BorgWarner Inc. (BWA) : Free Stock Analysis Report
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