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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 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Adient has a Zacks Rank of #2 (Buy), while Ferrari has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ADNT is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture 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.

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 16.67, while RACE has a forward P/E of 37.99. We also note that ADNT has a PEG ratio of 0.51. 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. RACE currently has a PEG ratio of 2.50.

Another notable valuation metric for ADNT is its P/B ratio of 1.22. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, RACE has a P/B of 20.54.

Based on these metrics and many more, ADNT holds a Value grade of B, while RACE has a Value grade of F.

ADNT sticks out from RACE in both our Zacks Rank and Style Scores models, so value investors will likely feel that ADNT is the better 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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