Investors interested in stocks from the Automotive - Domestic sector have probably already heard of Blue Bird (BLBD) and Tesla (TSLA). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 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.
Right now, Blue Bird is sporting a Zacks Rank of #2 (Buy), while Tesla has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BLBD is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
BLBD currently has a forward P/E ratio of 12.17, while TSLA has a forward P/E of 298.40. We also note that BLBD has a PEG ratio of 2.34. 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 8.53.
Another notable valuation metric for BLBD is its P/B ratio of 6.36. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, TSLA has a P/B of 20.2.
Based on these metrics and many more, BLBD holds a Value grade of A, while TSLA has a Value grade of D.
BLBD 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 BLBD is likely the superior value option right now.
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Blue Bird Corporation (BLBD): Free Stock Analysis Report Tesla, Inc. (TSLA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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