Investors interested in Automotive – Original Equipment stocks may have come across Commercial Vehicle Group (CVGI) and Ferrari (RACE). However, which of these two stocks offers better value for investors? To answer this question, we need to take a closer look.
Zacks Rank and Style Scores
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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.
CVGI and RACE currently have Zacks Ranks of #2 (Buy) and #3 (Hold), respectively. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors can be confident that CVGI has an improving earnings outlook. However, this is only part of the picture for value investors.
Value investors analyze various traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels. Our Value category grades stocks based on key metrics, including the P/E ratio, the P/S ratio, earnings yield, cash flow per share, and other fundamentals that value investors frequently use.
CVGI currently has a forward P/E ratio of 10.44, while RACE has a forward P/E of 46.08. Additionally, CVGI has a PEG ratio of 0.50, which takes into account the company’s expected earnings growth rate, while RACE has a PEG ratio of 3.11. CVGI’s P/B ratio of 2.48 also reflects a stock’s market value against its book value, which is defined as total assets minus total liabilities. In comparison, RACE has a P/B ratio of 19.96.
These metrics, combined with others, give CVGI a Value grade of A, while RACE has been given a Value grade of C.
CVGI has shown stronger estimate revision activity and sports more attractive valuation metrics than RACE, making it the superior option for value investors. While both stocks have their strengths, CVGI’s Value grade of A indicates that it is a better investment for those looking for value.