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ADNT vs. RACE: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors with an interest in Automotive - Original Equipment stocks have likely encountered both Adient (ADNT) and Ferrari (RACE). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.

Adient has a Zacks Rank of #2 (Buy), while Ferrari has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ADNT has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

ADNT currently has a forward P/E ratio of 11.70, while RACE has a forward P/E of 37.71. We also note that ADNT has a PEG ratio of 0.36. 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. RACE currently has a PEG ratio of 2.45.

Another notable valuation metric for ADNT is its P/B ratio of 0.99. 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, RACE has a P/B of 17.84.

These metrics, and several others, help ADNT earn a Value grade of A, while RACE has been given a Value grade of F.

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


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Adient PLC (ADNT) : Free Stock Analysis Report
 
Ferrari N.V. (RACE) : Free Stock Analysis Report
 
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