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Investors interested in Automotive - Original Equipment stocks are likely familiar with Magna (MGA) and 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Magna is sporting a Zacks Rank of #1 (Strong Buy), while Gentex has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that MGA likely has seen a stronger improvement to its earnings outlook than GNTX has recently. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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 12.89, while GNTX has a forward P/E of 17.88. We also note that MGA has a PEG ratio of 1.83. 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 3.81.
Another notable valuation metric for MGA is its P/B ratio of 2.45. 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 4.50.
These metrics, and several others, help MGA earn a Value grade of B, while GNTX has been given a Value grade of C.
MGA has seen stronger estimate revision activity and sports more attractive valuation metrics than GNTX, so it seems like value investors will conclude that MGA is the superior 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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