MGA vs. GNTX: Which Stock Should Value Investors Buy Now?
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 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Magna has a Zacks Rank of #1 (Strong Buy), while Gentex has a Zacks Rank of #2 (Buy) 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. But this is just one piece of the puzzle for value investors.
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.
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.
MGA currently has a forward P/E ratio of 11.35, while GNTX has a forward P/E of 17.40. We also note that MGA has a PEG ratio of 2.12. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. GNTX currently has a PEG ratio of 6.67.
Another notable valuation metric for MGA is its P/B ratio of 2.16. 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 4.39.
Based on these metrics and many more, MGA holds a Value grade of A, while GNTX has a Value grade of D.
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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