Investors interested in stocks from the Automotive - Original Equipment sector have probably already heard of Strattec Security (STRT) and Mobileye Global (MBLY). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Strattec Security is sporting a Zacks Rank of #1 (Strong Buy), while Mobileye Global has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that STRT likely has seen a stronger improvement to its earnings outlook than MBLY has recently. 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 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 9.93, while MBLY has a forward P/E of 59.97. We also note that STRT has a PEG ratio of 0.99. 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. MBLY currently has a PEG ratio of 3.09.
Another notable valuation metric for STRT is its P/B ratio of 0.78. 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, MBLY has a P/B of 1.14.
Based on these metrics and many more, STRT holds a Value grade of A, while MBLY has a Value grade of F.
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 Mobileye Global Inc. (MBLY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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