Investors interested in Automotive - Foreign stocks are likely familiar with RENAULT SA (RNLSY) and SUZUKI MOTOR CP (SZKMY). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
RENAULT SA and SUZUKI MOTOR CP are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that RNLSY 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 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.
RNLSY currently has a forward P/E ratio of 5.43, while SZKMY has a forward P/E of 14.32. We also note that RNLSY has a PEG ratio of 0.80. 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. SZKMY currently has a PEG ratio of 3.33.
Another notable valuation metric for RNLSY is its P/B ratio of 0.40. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, SZKMY has a P/B of 1.22.
These are just a few of the metrics contributing to RNLSY's Value grade of A and SZKMY's Value grade of C.
RNLSY sticks out from SZKMY in both our Zacks Rank and Style Scores models, so value investors will likely feel that RNLSY is the better option right now.
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