Investors looking for stocks in the Automotive - Original Equipment sector might want to consider either Strattec Security (STRT) or AB Volvo (VLVLY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Strattec Security has a Zacks Rank of #1 (Strong Buy), while AB Volvo has a Zacks Rank of #5 (Strong Sell) right now. Investors should feel comfortable knowing that STRT likely has seen a stronger improvement to its earnings outlook than VLVLY has recently. But this is just one piece of the puzzle for value investors.
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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
STRT currently has a forward P/E ratio of 11.95, while VLVLY has a forward P/E of 14.19. We also note that STRT has a PEG ratio of 1.19. 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. VLVLY currently has a PEG ratio of 7.28.
Another notable valuation metric for STRT is its P/B ratio of 1.02. 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, VLVLY has a P/B of 3.02.
These are just a few of the metrics contributing to STRT's Value grade of A and VLVLY's Value grade of C.
STRT is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that STRT is likely the superior value option right now.
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Strattec Security Corporation (STRT): Free Stock Analysis Report AB Volvo (VLVLY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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