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GM vs. TSLA: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Automotive - Domestic sector have probably already heard of General Motors Company (GM - Free Report) and Tesla (TSLA - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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.

Right now, General Motors Company is sporting a Zacks Rank of #1 (Strong Buy), while Tesla has a Zacks Rank of #2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GM has an improving earnings outlook. But this is only part of the picture 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.

GM currently has a forward P/E ratio of 8.75, while TSLA has a forward P/E of 149.89. We also note that GM has a PEG ratio of 0.89. 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. TSLA currently has a PEG ratio of 4.34.

Another notable valuation metric for GM is its P/B ratio of 1.48. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, TSLA has a P/B of 26.01.

These are just a few of the metrics contributing to GM's Value grade of A and TSLA's Value grade of F.

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


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