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MOD or RACE: Which Is the Better Value Stock Right Now?

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Investors interested in Automotive - Original Equipment stocks are likely familiar with Modine (MOD - Free Report) and Ferrari (RACE - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Currently, Modine has a Zacks Rank of #1 (Strong Buy), while Ferrari has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that MOD has an improving earnings outlook. However, value investors will care about much more than just this.

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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

MOD currently has a forward P/E ratio of 12.39, while RACE has a forward P/E of 41.35. We also note that MOD has a PEG ratio of 0.50. 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. RACE currently has a PEG ratio of 2.79.

Another notable valuation metric for MOD is its P/B ratio of 2.27. 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, RACE has a P/B of 17.88.

These are just a few of the metrics contributing to MOD's Value grade of A and RACE's Value grade of C.

MOD stands above RACE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MOD is the superior value option right now.


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