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VLEEY vs. RACE: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors with an interest in Automotive - Original Equipment stocks have likely encountered both 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.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Valeo S.A. has a Zacks Rank of #1 (Strong Buy), while Ferrari has a Zacks Rank of #2 (Buy) right now. Investors should feel comfortable knowing that VLEEY likely has seen a stronger improvement to its earnings outlook than RACE has recently. 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.

VLEEY currently has a forward P/E ratio of 10.57, while RACE has a forward P/E of 40.17. We also note that VLEEY has a PEG ratio of 1.77. 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 2.45.

Another notable valuation metric for VLEEY is its P/B ratio of 1.14. 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 18.60.

These metrics, and several others, help VLEEY earn a Value grade of A, while RACE has been given a 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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