Investors interested in Automotive - Original Equipment stocks are likely familiar with Strattec Security (STRT) and Magna (MGA). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Strattec Security has a Zacks Rank of #1 (Strong Buy), while Magna has a Zacks Rank of #5 (Strong Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that STRT is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
STRT currently has a forward P/E ratio of 16.72, while MGA has a forward P/E of 56. We also note that STRT has a PEG ratio of 1.11. 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. MGA currently has a PEG ratio of 16.99.
Another notable valuation metric for STRT is its P/B ratio of 0.26. 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, MGA has a P/B of 1.26.
These are just a few of the metrics contributing to STRT's Value grade of A and MGA's Value grade of C.
STRT stands above MGA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that STRT is the superior value option right now.
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Strattec Security Corporation (STRT) : Free Stock Analysis Report
Magna International Inc. (MGA) : Free Stock Analysis Report
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