Investors interested in Automotive - Original Equipment stocks are likely familiar with Oshkosh (OSK) and Ferrari (RACE). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Oshkosh has a Zacks Rank of #2 (Buy), while Ferrari has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that OSK likely has seen a stronger improvement to its earnings outlook than RACE has recently. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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 8.62, while RACE has a forward P/E of 38.36. We also note that OSK has a PEG ratio of 0.74. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. RACE currently has a PEG ratio of 2.34.
Another notable valuation metric for OSK is its P/B ratio of 1.83. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, RACE has a P/B of 18.94.
These metrics, and several others, help OSK earn a Value grade of A, while RACE has been given a Value grade of F.
OSK sticks out from RACE in both our Zacks Rank and Style Scores models, so value investors will likely feel that OSK is the better 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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