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FCAU vs. ATDRY: Which Stock Should Value Investors Buy Now?

Zacks Equity Research

Investors looking for stocks in the Automotive - Foreign sector might want to consider either Fiat Chrysler (FCAU) or Auto Trader Group (ATDRY). 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.

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

Currently, Fiat Chrysler has a Zacks Rank of #2 (Buy), while Auto Trader Group has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that FCAU likely has seen a stronger improvement to its earnings outlook than ATDRY has recently. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

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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.

FCAU currently has a forward P/E ratio of 4.63, while ATDRY has a forward P/E of 24.14. We also note that FCAU has a PEG ratio of 1.65. 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. ATDRY currently has a PEG ratio of 2.87.

Another notable valuation metric for FCAU is its P/B ratio of 0.93. 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, ATDRY has a P/B of 82.74.

These are just a few of the metrics contributing to FCAU's Value grade of A and ATDRY's Value grade of D.

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


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Fiat Chrysler Automobiles N.V. (FCAU) : Free Stock Analysis Report
 
Auto Trader Group (ATDRY) : Free Stock Analysis Report
 
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