PCAR vs. TSLA: Which Stock Is the Better Value Option?
Investors with an interest in Automotive - Domestic stocks have likely encountered both Paccar (PCAR) and Tesla (TSLA). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Paccar and Tesla are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that PCAR likely has seen a stronger improvement to its earnings outlook than TSLA has recently. 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 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 14.10, while TSLA has a forward P/E of 58.06. We also note that PCAR has a PEG ratio of 1.79. 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. TSLA currently has a PEG ratio of 2.59.
Another notable valuation metric for PCAR is its P/B ratio of 3.78. 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, TSLA has a P/B of 8.92.
Based on these metrics and many more, PCAR holds a Value grade of A, while TSLA has a Value grade of C.
PCAR is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that PCAR is likely the superior value option right now.
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PACCAR Inc. (PCAR) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
