Investors interested in stocks from the Automotive - Original Equipment sector have probably already heard of Phinia (PHIN) and Modine (MOD). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, both Phinia and Modine are sporting a Zacks Rank of #1 (Strong Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
PHIN currently has a forward P/E ratio of 12.28, while MOD has a forward P/E of 29.14. We also note that PHIN has a PEG ratio of 0.50. 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. MOD currently has a PEG ratio of 0.86.
Another notable valuation metric for PHIN is its P/B ratio of 1.34. 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, MOD has a P/B of 6.95.
These metrics, and several others, help PHIN earn a Value grade of A, while MOD has been given a Value grade of C.
Both PHIN and MOD are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PHIN is the superior value option right now.
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PHINIA Inc. (PHIN): Free Stock Analysis Report Modine Manufacturing Company (MOD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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