VC or RACE: Which Is the Better Value Stock Right Now?
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both Visteon and Ferrari are holding a Zacks Rank of #1 (Strong Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
VC currently has a forward P/E ratio of 14.57, while RACE has a forward P/E of 50.43. We also note that VC has a PEG ratio of 4.89. 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. RACE currently has a PEG ratio of 5.67.
Another notable valuation metric for VC is its P/B ratio of 2.06. 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, RACE has a P/B of 33.32.
Based on these metrics and many more, VC holds a Value grade of A, while RACE has a Value grade of F.
Both VC and RACE are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that VC is the superior value option right now.
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Visteon Corporation (VC) : Free Stock Analysis Report
Ferrari N.V. (RACE) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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