Investors with an interest in Automotive - Original Equipment stocks have likely encountered both Modine (MOD) and Driven Brands Holdings Inc. (DRVN). 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 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.
Right now, both Modine and Driven Brands Holdings Inc. are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.
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 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.
MOD currently has a forward P/E ratio of 9.15, while DRVN has a forward P/E of 27.25. We also note that MOD has a PEG ratio of 0.37. 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. DRVN currently has a PEG ratio of 1.43.
Another notable valuation metric for MOD is its P/B ratio of 1.80. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, DRVN has a P/B of 3.45.
Based on these metrics and many more, MOD holds a Value grade of A, while DRVN has a Value grade of C.
Both MOD and DRVN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MOD is the superior value option right now.
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Modine Manufacturing Company (MOD) : Free Stock Analysis Report
Driven Brands Holdings Inc. (DRVN) : Free Stock Analysis Report
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