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OSK vs. THRM: Which Stock Is the Better Value Option?

Zacks Equity Research
NantHealth, Inc. (NH) delivered earnings and revenue surprises of 23.08% and -10.83%, respectively, for the quarter ended September 2018. Do the numbers hold clues to what lies ahead for the stock?

Investors interested in stocks from the Automotive - Original Equipment sector have probably already heard of Oshkosh (OSK) and Gentherm (THRM). But which of these two companies is the best option for those looking for undervalued stocks? 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 Gentherm has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that OSK is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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 11.64, while THRM has a forward P/E of 19.57. We also note that OSK has a PEG ratio of 0.64. 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. THRM currently has a PEG ratio of 0.78.

Another notable valuation metric for OSK is its P/B ratio of 2.11. 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, THRM has a P/B of 2.84.

Based on these metrics and many more, OSK holds a Value grade of A, while THRM has a Value grade of C.

OSK stands above THRM thanks to its solid earnings outlook, and based on these valuation figures, we also feel that OSK is the superior value option right now.


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Oshkosh Corporation (OSK) : Free Stock Analysis Report
 
Gentherm Inc (THRM) : Free Stock Analysis Report
 
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