Investors looking for stocks in the Automotive - Original Equipment sector might want to consider either Magna (MGA) or Gentex (GNTX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Magna has a Zacks Rank of #2 (Buy), while Gentex has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that MGA has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
MGA currently has a forward P/E ratio of 7.42, while GNTX has a forward P/E of 12.97. We also note that MGA has a PEG ratio of 1.24. 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 2.16.
Another notable valuation metric for MGA is its P/B ratio of 1.51. 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 2.96.
These metrics, and several others, help MGA earn a Value grade of A, while GNTX has been given a Value grade of C.
MGA stands above GNTX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MGA is the superior value option right now.
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Magna International Inc. (MGA) : Free Stock Analysis Report
Gentex Corporation (GNTX) : Free Stock Analysis Report
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