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PCAR or TSLA: Which Is the Better Value Stock Right Now?

Zacks Equity Research
·2 min read

Investors interested in stocks from the Automotive - Domestic sector have probably already heard of Paccar (PCAR) and Tesla (TSLA). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Paccar is sporting a Zacks Rank of #2 (Buy), while Tesla has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that PCAR likely has seen a stronger improvement to its earnings outlook than TSLA 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.

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.

PCAR currently has a forward P/E ratio of 26.77, while TSLA has a forward P/E of 239.04. We also note that PCAR has a PEG ratio of 2.68. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. TSLA currently has a PEG ratio of 6.83.

Another notable valuation metric for PCAR is its P/B ratio of 3.16. 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, TSLA has a P/B of 37.71.

Based on these metrics and many more, PCAR holds a Value grade of B, while TSLA has a Value grade of F.

PCAR sticks out from TSLA in both our Zacks Rank and Style Scores models, so value investors will likely feel that PCAR is the better option right now.


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