MOD vs. RACE: Which Stock Is the Better Value Option?
Investors with an interest in Automotive - Original Equipment stocks have likely encountered both Modine (MOD) and Ferrari (RACE). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Modine has a Zacks Rank of #1 (Strong Buy), while Ferrari has a Zacks Rank of #3 (Hold) right now. This means that MOD's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
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.
MOD currently has a forward P/E ratio of 15.35, while RACE has a forward P/E of 42.05. We also note that MOD has a PEG ratio of 0.61. 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. RACE currently has a PEG ratio of 2.67.
Another notable valuation metric for MOD is its P/B ratio of 3.59. 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, RACE has a P/B of 19.85.
These metrics, and several others, help MOD earn a Value grade of B, while RACE has been given a Value grade of C.
MOD stands above RACE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MOD is the superior value option right now.
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Modine Manufacturing Company (MOD) : Free Stock Analysis Report
Ferrari N.V. (RACE) : Free Stock Analysis Report
