Investors with an interest in Automotive - Original Equipment stocks have likely encountered both Visteon (VC) and Ferrari (NYSE:RACE). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Visteon has a Zacks Rank of #2 (Buy), while Ferrari has a Zacks Rank of #4 (Sell) right now. This means that VC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
VC currently has a forward P/E ratio of 17.14, while RACE has a forward P/E of 39.36. We also note that VC has a PEG ratio of 1.56. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. RACE currently has a PEG ratio of 2.55.
Another notable valuation metric for VC is its P/B ratio of 4.05. 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 20.71.
These metrics, and several others, help VC earn a Value grade of B, while RACE has been given a Value grade of F.
VC sticks out from RACE in both our Zacks Rank and Style Scores models, so value investors will likely feel that VC is the better option right now.
Visteon Corporation (VC): Free Stock Analysis Report
Ferrari N.V. (RACE): Free Stock Analysis Report
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Zacks Investment Research