STRT vs. MBLY: 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 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.

Currently, Strattec Security has a Zacks Rank of #1 (Strong Buy), while Mobileye Global has a Zacks Rank of #3 (Hold). 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 just one factor that value investors are interested in.

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.

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.

STRT currently has a forward P/E ratio of 12.27, while MBLY has a forward P/E of 58.24. We also note that STRT has a PEG ratio of 1.23. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MBLY currently has a PEG ratio of 3.

Another notable valuation metric for STRT is its P/B ratio of 0.96. 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, MBLY has a P/B of 1.10.

Based on these metrics and many more, STRT holds a Value grade of A, while MBLY has a Value grade of D.

STRT has seen stronger estimate revision activity and sports more attractive valuation metrics than MBLY, so it seems like value investors will conclude that STRT is the superior option right now.

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

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