APTV or MOD: Which Is the Better Value Stock Right Now?

Investors interested in stocks from the Automotive - Original Equipment sector have probably already heard of Aptiv PLC (APTV) and Modine (MOD). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Aptiv PLC and Modine are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that APTV likely has seen a stronger improvement to its earnings outlook than MOD 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 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.

APTV currently has a forward P/E ratio of 10.65, while MOD has a forward P/E of 32.29. We also note that APTV has a PEG ratio of 0.84. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. MOD currently has a PEG ratio of 0.95.

Another notable valuation metric for APTV is its P/B ratio of 1.87. 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, MOD has a P/B of 7.4.

These are just a few of the metrics contributing to APTV's Value grade of A and MOD's Value grade of C.

APTV sticks out from MOD in both our Zacks Rank and Style Scores models, so value investors will likely feel that APTV is the better option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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