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MGA or GNTX: Which Is the Better Value Stock Right Now?

Zacks Equity Research
·2 min read

Investors interested in Automotive - Original Equipment stocks are likely familiar with Magna (MGA) and Gentex (GNTX). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Magna is sporting a Zacks Rank of #1 (Strong Buy), while Gentex has a Zacks Rank of #3 (Hold). This means that MGA's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.

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The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

MGA currently has a forward P/E ratio of 12.72, while GNTX has a forward P/E of 18.79. We also note that MGA has a PEG ratio of 2.37. 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. GNTX currently has a PEG ratio of 7.20.

Another notable valuation metric for MGA is its P/B ratio of 2.18. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, GNTX has a P/B of 4.72.

These metrics, and several others, help MGA earn a Value grade of B, while GNTX has been given a Value grade of C.

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


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Magna International Inc. (MGA) : Free Stock Analysis Report
 
Gentex Corporation (GNTX) : Free Stock Analysis Report
 
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