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.
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 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 #4 (Sell). This means that BLBD's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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 11.61, while TSLA has a forward P/E of 195.71. We also note that BLBD has a PEG ratio of 2.23. 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 5.59.
Another notable valuation metric for BLBD is its P/B ratio of 6.07. 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 18.11.
These are just a few of the metrics contributing to BLBD's Value grade of A and TSLA's Value grade of F.
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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