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PII vs. TSLA: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Automotive - Domestic sector have probably already heard of Polaris Inc (PII - Free Report) and Tesla (TSLA - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Polaris Inc and Tesla are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that PII's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

PII currently has a forward P/E ratio of 7.58, while TSLA has a forward P/E of 54.15. We also note that PII has a PEG ratio of 0.63. 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. TSLA currently has a PEG ratio of 1.48.

Another notable valuation metric for PII is its P/B ratio of 2.91. 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, TSLA has a P/B of 10.32.

These are just a few of the metrics contributing to PII's Value grade of B and TSLA's Value grade of F.

PII stands above TSLA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PII is the superior value option right now.


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