Investors with an interest in Automotive - Original Equipment stocks have likely encountered both Oshkosh (OSK - Free Report) and Ferrari (RACE - 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, Oshkosh has a Zacks Rank of #2 (Buy), while Ferrari has a Zacks Rank of #3 (Hold). This means that OSK'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 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 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.
OSK currently has a forward P/E ratio of 11.59, while RACE has a forward P/E of 35. We also note that OSK has a PEG ratio of 0.64. 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 2.02.
Another notable valuation metric for OSK is its P/B ratio of 2.11. 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 21.95.
These metrics, and several others, help OSK earn a Value grade of A, while RACE has been given a Value grade of F.
OSK stands above RACE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that OSK is the superior value option right now.