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BWA vs. LEA: Which Stock Is the Better Value Option?

Published 10/07/2020, 11:40 PM
Updated 07/09/2023, 06:31 AM

Investors with an interest in Automotive - Original Equipment stocks have likely encountered both BorgWarner (BWA) and Lear (NYSE:LEA). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

BorgWarner and Lear are both sporting a Zacks Rank of # 1 (Strong Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one piece of the puzzle for value investors.

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 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.

BWA currently has a forward P/E ratio of 19.15, while LEA has a forward P/E of 40.89. We also note that BWA has a PEG ratio of 2.98. 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. LEA currently has a PEG ratio of 5.95.

Another notable valuation metric for BWA is its P/B ratio of 1.81. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, LEA has a P/B of 1.94.

Based on these metrics and many more, BWA holds a Value grade of B, while LEA has a Value grade of C.

Both BWA and LEA are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BWA is the superior value option right now.


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BorgWarner Inc. (NYSE:BWA): Free Stock Analysis Report

Lear Corporation (LEA): Free Stock Analysis Report

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