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GM vs. TSLA: Which Stock Is the Better Value Option?

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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 companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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, General Motors Company has a Zacks Rank of #1 (Strong Buy), while Tesla 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 GM has an improving earnings outlook. But this is only part of the picture for value investors.

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 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 5.62, while TSLA has a forward P/E of 74.24. We also note that GM has a PEG ratio of 0.57. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. TSLA currently has a PEG ratio of 3.01.

Another notable valuation metric for GM is its P/B ratio of 0.72. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, TSLA has a P/B of 16.72.

Based on these metrics and many more, GM holds a Value grade of A, while TSLA has a Value grade of D.

GM 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 GM is likely the superior value option right now.


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