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STRT vs. RACE: Which Stock Should Value Investors Buy Now?

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Zacks Equity Research
·2 min read
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Investors interested in Automotive - Original Equipment stocks are likely familiar with Strattec Security (STRT) and Ferrari (RACE). 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.

Strattec Security has a Zacks Rank of #1 (Strong Buy), while Ferrari has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that STRT has an improving earnings outlook. However, value investors will care about much more than just this.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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 6.58, while RACE has a forward P/E of 41.20. We also note that STRT has a PEG ratio of 0.44. 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. RACE currently has a PEG ratio of 1.91.

Another notable valuation metric for STRT is its P/B ratio of 0.86. 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, RACE has a P/B of 18.46.

Based on these metrics and many more, STRT holds a Value grade of A, while RACE has a Value grade of D.

STRT sticks out from RACE in both our Zacks Rank and Style Scores models, so value investors will likely feel that STRT is the better option right now.


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Strattec Security Corporation (STRT) : Free Stock Analysis Report
 
Ferrari N.V. (RACE) : Free Stock Analysis Report
 
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Zacks Investment Research