LEA or DRVN: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Automotive - Original Equipment sector have probably already heard of Lear (LEA) and Driven Brands Holdings Inc. (DRVN). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Lear and Driven Brands Holdings Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that LEA is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
LEA currently has a forward P/E ratio of 12.91, while DRVN has a forward P/E of 21.49. We also note that LEA has a PEG ratio of 0.37. 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. DRVN currently has a PEG ratio of 3.51.
Another notable valuation metric for LEA is its P/B ratio of 1.74. 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, DRVN has a P/B of 2.60.
These are just a few of the metrics contributing to LEA's Value grade of A and DRVN's Value grade of C.
LEA 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 LEA is likely the superior value option right now.
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Lear Corporation (LEA) : Free Stock Analysis Report
Driven Brands Holdings Inc. (DRVN) : Free Stock Analysis Report