Investors looking for stocks in the Automotive - Original Equipment sector might want to consider either BorgWarner (BWA) or Gentex (GNTX). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
BorgWarner and Gentex are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. Investors should feel comfortable knowing that BWA likely has seen a stronger improvement to its earnings outlook than GNTX has recently. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
BWA currently has a forward P/E ratio of 9.45, while GNTX has a forward P/E of 19.14. We also note that BWA has a PEG ratio of 0.32. 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. GNTX currently has a PEG ratio of 1.66.
Another notable valuation metric for BWA is its P/B ratio of 1.32. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, GNTX has a P/B of 3.42.
These metrics, and several others, help BWA earn a Value grade of A, while GNTX has been given a Value grade of D.
BWA has seen stronger estimate revision activity and sports more attractive valuation metrics than GNTX, so it seems like value investors will conclude that BWA is the superior option right now.
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BorgWarner Inc. (BWA) : Free Stock Analysis Report
Gentex Corporation (GNTX) : Free Stock Analysis Report
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