MOD vs. RACE: Which Stock Is the Better Value Option?
Investors looking for stocks in the Automotive - Original Equipment sector might want to consider either Modine (MOD) or 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.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Modine and Ferrari are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that MOD's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
MOD currently has a forward P/E ratio of 13.07, while RACE has a forward P/E of 44.51. We also note that MOD has a PEG ratio of 0.52. 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 3.75.
Another notable valuation metric for MOD is its P/B ratio of 2.39. 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 19.79.
These are just a few of the metrics contributing to MOD's Value grade of A and RACE's Value grade of C.
MOD has seen stronger estimate revision activity and sports more attractive valuation metrics than RACE, so it seems like value investors will conclude that MOD is the superior option right now.
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Modine Manufacturing Company (MOD) : Free Stock Analysis Report
Ferrari N.V. (RACE) : Free Stock Analysis Report
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