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MOD vs. DRVN: Which Stock Is the Better Value Option?
Investors interested in Automotive - Original Equipment stocks are likely familiar with Modine (MOD - Free Report) and Driven Brands Holdings Inc. (DRVN - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.
Right now, Modine is sporting a Zacks Rank of #2 (Buy), while Driven Brands Holdings Inc. has a Zacks Rank of #3 (Hold). This means that MOD's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
MOD currently has a forward P/E ratio of 7.95, while DRVN has a forward P/E of 24.31. We also note that MOD has a PEG ratio of 0.32. 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. DRVN currently has a PEG ratio of 1.28.
Another notable valuation metric for MOD is its P/B ratio of 1.57. 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, DRVN has a P/B of 3.04.
These metrics, and several others, help MOD earn a Value grade of A, while DRVN has been given a Value grade of C.
MOD stands above DRVN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MOD is the superior value option right now.