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Investors interested in Automotive - Original Equipment stocks are likely familiar with Aptiv PLC (APTV) and Modine (MOD). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.
Aptiv PLC has a Zacks Rank of #2 (Buy), while Modine has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that APTV has an improving earnings outlook. However, value investors will care about much more than just this.
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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
APTV currently has a forward P/E ratio of 8.73, while MOD has a forward P/E of 23.92. We also note that APTV has a PEG ratio of 0.58. 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. MOD currently has a PEG ratio of 0.70.
Another notable valuation metric for APTV is its P/B ratio of 1.67. 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, MOD has a P/B of 5.65.
Based on these metrics and many more, APTV holds a Value grade of A, while MOD has a Value grade of C.
APTV is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that APTV is likely the superior value option right now.
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Aptiv PLC (APTV) : Free Stock Analysis Report
Modine Manufacturing Company (MOD) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).