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MGA vs. GNTX: Which Stock Is the Better Value Option?

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Investors with an interest in Automotive - Original Equipment stocks have likely encountered both Magna (MGA - Free Report) and Gentex (GNTX - Free Report) . 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.

Magna and Gentex are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that MGA is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.

MGA currently has a forward P/E ratio of 12.68, while GNTX has a forward P/E of 17.94. We also note that MGA has a PEG ratio of 2.37. 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. GNTX currently has a PEG ratio of 6.87.

Another notable valuation metric for MGA is its P/B ratio of 2.19. 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, GNTX has a P/B of 4.49.

Based on these metrics and many more, MGA holds a Value grade of B, while GNTX has a Value grade of D.

MGA has seen stronger estimate revision activity and sports more attractive valuation metrics than GNTX, so it seems like value investors will conclude that MGA is the superior option right now.


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