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GM or TSLA: Which Is the Better Value Stock Right Now?

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Investors looking for stocks in the Automotive - Domestic sector might want to consider either General Motors Company (GM - Free Report) or Tesla (TSLA - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

General Motors Company has a Zacks Rank of #2 (Buy), while Tesla has a Zacks Rank of #4 (Sell) right now. This means that GM's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.

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.

GM currently has a forward P/E ratio of 5.57, while TSLA has a forward P/E of 48.26. We also note that GM has a PEG ratio of 0.57. 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 1.97.

Another notable valuation metric for GM is its P/B ratio of 0.67. 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 12.87.

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

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


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