Investors with an interest in Automotive - Original Equipment stocks have likely encountered both Tower International (TOWR - 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Right now, Tower International is sporting a Zacks Rank of #2 (Buy), while Ferrari 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 TOWR has an improving earnings outlook. 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.
TOWR currently has a forward P/E ratio of 7.09, while RACE has a forward P/E of 32.62. We also note that TOWR has a PEG ratio of 0.89. 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. RACE currently has a PEG ratio of 2.01.
Another notable valuation metric for TOWR is its P/B ratio of 1.92. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, RACE has a P/B of 19.99.
These are just a few of the metrics contributing to TOWR's Value grade of A and RACE's Value grade of D.
TOWR stands above RACE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TOWR is the superior value option right now.