Investors interested in stocks from the Automotive - Domestic sector have probably already heard of General Motors Company (GM) and Tesla (TSLA). 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.
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 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.
Right now, General Motors Company is sporting a Zacks Rank of #2 (Buy), while Tesla has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that GM likely has seen a stronger improvement to its earnings outlook than TSLA has recently. But this is just one piece of the puzzle for value investors.
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.
GM currently has a forward P/E ratio of 11.22, while TSLA has a forward P/E of 147.69. We also note that GM has a PEG ratio of 1.14. 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. TSLA currently has a PEG ratio of 3.94.
Another notable valuation metric for GM is its P/B ratio of 1.58. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, TSLA has a P/B of 25.24.
These are just a few of the metrics contributing to GM's Value grade of A and TSLA's Value grade of F.
GM sticks out from TSLA in both our Zacks Rank and Style Scores models, so value investors will likely feel that GM is the better option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.