Investors interested in Automotive - Original Equipment stocks are likely familiar with Strattec Security (STRT) and Atmus Filtration Technologies (ATMU). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Strattec Security and Atmus Filtration Technologies are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. This means that STRT'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 also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
STRT currently has a forward P/E ratio of 13.18, while ATMU has a forward P/E of 21.11. We also note that STRT has a PEG ratio of 1.32. 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. ATMU currently has a PEG ratio of 2.78.
Another notable valuation metric for STRT is its P/B ratio of 1.31. 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, ATMU has a P/B of 13.32.
Based on these metrics and many more, STRT holds a Value grade of A, while ATMU has a 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 Atmus Filtration Technologies Inc. (ATMU): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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