Investors interested in stocks from the Automotive - Replacement Parts sector have probably already heard of Standard Motor Products (SMP) and Genuine Parts (GPC). 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.
Currently, Standard Motor Products has a Zacks Rank of #2 (Buy), while Genuine Parts has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SMP has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
SMP currently has a forward P/E ratio of 16.22, while GPC has a forward P/E of 18.06. We also note that SMP has a PEG ratio of 1.47. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. GPC currently has a PEG ratio of 3.39.
Another notable valuation metric for SMP is its P/B ratio of 2.32. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, GPC has a P/B of 4.06.
These are just a few of the metrics contributing to SMP's Value grade of B and GPC's Value grade of C.
SMP stands above GPC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SMP is the superior value option right now.
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Standard Motor Products, Inc. (SMP) : Free Stock Analysis Report
Genuine Parts Company (GPC) : Free Stock Analysis Report
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