Investors interested in stocks from the Automotive - Original Equipment sector have probably already heard of Oshkosh (OSK - Free Report) and Ferrari (RACE - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 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). Investors should feel comfortable knowing that OSK likely has seen a stronger improvement to its earnings outlook than RACE has recently. 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 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.
OSK currently has a forward P/E ratio of 9.67, while RACE has a forward P/E of 30.23. We also note that OSK has a PEG ratio of 0.66. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. RACE currently has a PEG ratio of 1.99.
Another notable valuation metric for OSK is its P/B ratio of 1.97. 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, RACE has a P/B of 14.63.
These are just a few of the metrics contributing to OSK's Value grade of A and RACE's Value grade of F.
OSK sticks out from RACE in both our Zacks Rank and Style Scores models, so value investors will likely feel that OSK is the better option right now.