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Investors interested in Automotive - Domestic stocks are likely familiar with Blue Bird (BLBD) and Tesla (TSLA). But which of these two stocks presents investors with the better value opportunity right now? 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 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.
Blue Bird and Tesla are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BLBD has an improving earnings outlook. 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.
BLBD currently has a forward P/E ratio of 8.24, while TSLA has a forward P/E of 94.46. We also note that BLBD has a PEG ratio of 0.76. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. TSLA currently has a PEG ratio of 3.99.
Another notable valuation metric for BLBD is its P/B ratio of 5.88. 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, TSLA has a P/B of 11.52.
These metrics, and several others, help BLBD earn a Value grade of A, while TSLA has been given a Value grade of F.
BLBD has seen stronger estimate revision activity and sports more attractive valuation metrics than TSLA, so it seems like value investors will conclude that BLBD is the superior option right now.
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Blue Bird Corporation (BLBD) : Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).