STRT vs. ATMU: Which Stock Is the Better Value Option?

Investors interested in stocks from the Automotive - Original Equipment sector have probably already heard of Strattec Security (STRT) and Atmus Filtration Technologies (ATMU). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 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 #2 (Buy), while Atmus Filtration Technologies has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that STRT has an improving earnings outlook. 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.

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 14.65, while ATMU has a forward P/E of 20.68. We also note that STRT has a PEG ratio of 1.47. 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. ATMU currently has a PEG ratio of 2.55.

Another notable valuation metric for STRT is its P/B ratio of 1.29. 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, ATMU has a P/B of 14.14.

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

STRT stands above ATMU thanks to its solid earnings outlook, and based on these valuation figures, we also feel that STRT is the superior value option right now.

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

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