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HOG vs. TSLA: Which Stock Is the Better Value Option?
Investors with an interest in Automotive - Domestic stocks have likely encountered both Harley-Davidson (HOG - 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Harley-Davidson has a Zacks Rank of #2 (Buy), while Tesla has a Zacks Rank of #5 (Strong Sell) right now. This means that HOG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
HOG currently has a forward P/E ratio of 9.05, while TSLA has a forward P/E of 28.82. We also note that HOG has a PEG ratio of 0.98. 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 1.02.
Another notable valuation metric for HOG is its P/B ratio of 2.22. 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, TSLA has a P/B of 10.35.
These are just a few of the metrics contributing to HOG's Value grade of A and TSLA's Value grade of D.
HOG stands above TSLA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HOG is the superior value option right now.