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

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Investors interested in stocks from the Automotive - Original Equipment sector have probably already heard of Continental AG (CTTAY - Free Report) and Ferrari (RACE - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.

Continental AG and Ferrari are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. Investors should feel comfortable knowing that CTTAY likely has seen a stronger improvement to its earnings outlook than RACE has recently. However, value investors will care about much more than just this.

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.

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.

CTTAY currently has a forward P/E ratio of 13.81, while RACE has a forward P/E of 41.76. We also note that CTTAY has a PEG ratio of 0.32. 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 3.70.

Another notable valuation metric for CTTAY is its P/B ratio of 0.95. 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, RACE has a P/B of 14.23.

These metrics, and several others, help CTTAY earn a Value grade of A, while RACE has been given a Value grade of D.

CTTAY 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 CTTAY is likely the superior value option right now.


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