Investors with an interest in Automotive - Domestic stocks have likely encountered both Paccar (PCAR - Free Report) and Fox Factory Holding (FOXF - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Paccar has a Zacks Rank of #2 (Buy), while Fox Factory Holding has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PCAR is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
PCAR currently has a forward P/E ratio of 9.29, while FOXF has a forward P/E of 25.67. We also note that PCAR has a PEG ratio of 0.86. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. FOXF currently has a PEG ratio of 1.53.
Another notable valuation metric for PCAR is its P/B ratio of 2.19. 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, FOXF has a P/B of 7.46.
Based on these metrics and many more, PCAR holds a Value grade of A, while FOXF has a Value grade of D.
PCAR stands above FOXF thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PCAR is the superior value option right now.