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AXL vs. HZN: Which Stock Is the Better Value Option?

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Investors interested in Automotive - Original Equipment stocks are likely familiar with American Axle & Manufacturing (AXL - Free Report) and Horizon Global (HZN - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, American Axle & Manufacturing is sporting a Zacks Rank of #2 (Buy), while Horizon Global has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that AXL is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

AXL currently has a forward P/E ratio of 4.18, while HZN has a forward P/E of 49.14. We also note that AXL has a PEG ratio of 0.52. 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. HZN currently has a PEG ratio of 14.33.

Another notable valuation metric for AXL is its P/B ratio of 1.06. 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, HZN has a P/B of 1.71.

These metrics, and several others, help AXL earn a Value grade of A, while HZN has been given a Value grade of D.

AXL has seen stronger estimate revision activity and sports more attractive valuation metrics than HZN, so it seems like value investors will conclude that AXL is the superior option right now.




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American Axle & Manufacturing Holdings, Inc. (AXL) - free report >>

Horizon Global Corporation (HZN) - free report >>

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