Investors interested in Automotive - Original Equipment stocks are likely familiar with Valeo S.A. (VLEEY) and Ferrari (RACE). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, Valeo S.A. has a Zacks Rank of #1 (Strong Buy), while Ferrari has a Zacks Rank of #3 (Hold). This means that VLEEY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
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 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.
VLEEY currently has a forward P/E ratio of 10.14, while RACE has a forward P/E of 39.40. We also note that VLEEY has a PEG ratio of 1.69. 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 2.40.
Another notable valuation metric for VLEEY is its P/B ratio of 1.06. 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 17.77.
These are just a few of the metrics contributing to VLEEY's Value grade of A and RACE's Value grade of D.
VLEEY 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 VLEEY is likely the superior value option right now.
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Valeo S.A. (VLEEY) : Free Stock Analysis Report
Ferrari N.V. (RACE) : Free Stock Analysis Report
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