Investors with an interest in Automotive - Original Equipment stocks have likely encountered both Commercial Vehicle Group (CVGI) and Ferrari (RACE). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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.
Commercial Vehicle Group and Ferrari are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CVGI has an improving earnings outlook. But this is only part of the picture 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 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.
CVGI currently has a forward P/E ratio of 10.44, while RACE has a forward P/E of 46.08. We also note that CVGI has a PEG ratio of 0.50. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. RACE currently has a PEG ratio of 3.11.
Another notable valuation metric for CVGI is its P/B ratio of 2.48. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, RACE has a P/B of 19.96.
These metrics, and several others, help CVGI earn a Value grade of A, while RACE has been given a Value grade of C.
CVGI has seen stronger estimate revision activity and sports more attractive valuation metrics than RACE, so it seems like value investors will conclude that CVGI is the superior option right now.
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