Investors with an interest in Automotive - Domestic stocks have likely encountered both Paccar (PCAR) and Fox Factory Holding (FOXF). 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Paccar is sporting a Zacks Rank of #2 (Buy), while Fox Factory Holding 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 FOXF has recently. But this is just one piece of the puzzle for value investors.
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 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.
PCAR currently has a forward P/E ratio of 10.34, while FOXF has a forward P/E of 24.22. We also note that PCAR has a PEG ratio of 0.96. 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. FOXF currently has a PEG ratio of 1.35.
Another notable valuation metric for PCAR is its P/B ratio of 2.65. 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, FOXF has a P/B of 7.55.
These metrics, and several others, help PCAR earn a Value grade of A, while FOXF has been given a Value grade of D.
PCAR stands above FOXF thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PCAR is the superior value option right now.
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PACCAR Inc. (PCAR) : Free Stock Analysis Report
Fox Factory Holding Corp. (FOXF) : Free Stock Analysis Report
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