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STRT vs. DAN: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors looking for stocks in the Automotive - Original Equipment sector might want to consider either Strattec Security (STRT) or Dana (DAN). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Strattec Security is sporting a Zacks Rank of #1 (Strong Buy), while Dana has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that STRT is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

STRT currently has a forward P/E ratio of 14.57, while DAN has a forward P/E of 37.12. We also note that STRT has a PEG ratio of 0.97. 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. DAN currently has a PEG ratio of 6.83.

Another notable valuation metric for STRT is its P/B ratio of 0.46. 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, DAN has a P/B of 0.99.

These are just a few of the metrics contributing to STRT's Value grade of A and DAN's Value grade of C.

STRT 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 STRT is likely the superior value option right now.


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Strattec Security Corporation (STRT) : Free Stock Analysis Report
 
Dana Incorporated (DAN) : Free Stock Analysis Report
 
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Zacks Investment Research