Back to top

Image: Bigstock

GPC or CARG: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors interested in stocks from the Automotive - Replacement Parts sector have probably already heard of Genuine Parts (GPC - Free Report) and CarGurus (CARG - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Genuine Parts and CarGurus are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that GPC likely has seen a stronger improvement to its earnings outlook than CARG has recently. But this is just one piece of the puzzle for value investors.

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.

GPC currently has a forward P/E ratio of 18.95, while CARG has a forward P/E of 23.06. We also note that GPC has a PEG ratio of 2.07. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CARG currently has a PEG ratio of 3.84.

Another notable valuation metric for GPC is its P/B ratio of 5.35. 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, CARG has a P/B of 6.71.

These metrics, and several others, help GPC earn a Value grade of B, while CARG has been given a Value grade of D.

GPC 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 GPC is likely the superior value option right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Genuine Parts Company (GPC) - free report >>

CarGurus, Inc. (CARG) - free report >>

Published in