TOWR vs. RACE: Which Stock Should Value Investors Buy Now?
Investors with an interest in Automotive - Original Equipment stocks have likely encountered both Tower International (TOWR) and Ferrari (RACE). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Tower International has a Zacks Rank of #2 (Buy), while Ferrari has a Zacks Rank of #4 (Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that TOWR is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
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.
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.
TOWR currently has a forward P/E ratio of 7.05, while RACE has a forward P/E of 31. We also note that TOWR has a PEG ratio of 0.88. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. RACE currently has a PEG ratio of 1.91.
Another notable valuation metric for TOWR is its P/B ratio of 1.92. 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, RACE has a P/B of 14.62.
These are just a few of the metrics contributing to TOWR's Value grade of A and RACE's Value grade of F.
TOWR sticks out from RACE in both our Zacks Rank and Style Scores models, so value investors will likely feel that TOWR is the better option right now.
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Tower International, Inc. (TOWR) : Free Stock Analysis Report
Ferrari N.V. (RACE) : Free Stock Analysis Report
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