Investors interested in Automotive - Original Equipment stocks are likely familiar with Oshkosh (OSK) and Ferrari (RACE). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Oshkosh and Ferrari are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that OSK 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
OSK currently has a forward P/E ratio of 9.76, while RACE has a forward P/E of 39.47. We also note that OSK has a PEG ratio of 0.84. 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. RACE currently has a PEG ratio of 2.40.
Another notable valuation metric for OSK is its P/B ratio of 2.05. 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 18.31.
These are just a few of the metrics contributing to OSK's Value grade of A and RACE's Value grade of F.
OSK has seen stronger estimate revision activity and sports more attractive valuation metrics than RACE, so it seems like value investors will conclude that OSK is the superior option right now.
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Oshkosh Corporation (OSK) : Free Stock Analysis Report
Ferrari N.V. (RACE) : Free Stock Analysis Report
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