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VLEEY vs. RACE: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2-min read

Investors interested in Automotive - Original Equipment stocks are likely familiar with Valeo S.A. (VLEEY) 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.

Valeo S.A. and Ferrari are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that VLEEY likely has seen a stronger improvement to its earnings outlook than RACE has recently. But this is just one factor that value investors are interested in.

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.

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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.

VLEEY currently has a forward P/E ratio of 22.88, while RACE has a forward P/E of 38.40. We also note that VLEEY has a PEG ratio of 0.45. 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 3.35.

Another notable valuation metric for VLEEY is its P/B ratio of 0.80. 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, RACE has a P/B of 14.50.

Based on these metrics and many more, VLEEY holds a Value grade of A, while RACE has a Value grade of C.

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


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Valeo S.A. (VLEEY) : Free Stock Analysis Report
 
Ferrari N.V. (RACE) : Free Stock Analysis Report
 
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Zacks Investment Research