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HOG vs. TSLA: Which Stock Is the Better Value Option?

Zacks Equity Research
·2-min read

Investors interested in stocks from the Automotive - Domestic sector have probably already heard of Harley-Davidson (HOG) and Tesla (TSLA). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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

Harley-Davidson and Tesla are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HOG is likely seeing its earnings outlook improve to a greater extent. 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.

HOG currently has a forward P/E ratio of 8.72, while TSLA has a forward P/E of 67.85. We also note that HOG has a PEG ratio of 0.94. 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. TSLA currently has a PEG ratio of 2.26.

Another notable valuation metric for HOG is its P/B ratio of 2.27. 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 22.82.

These metrics, and several others, help HOG earn a Value grade of A, while TSLA has been given a Value grade of D.

HOG sticks out from TSLA in both our Zacks Rank and Style Scores models, so value investors will likely feel that HOG is the better option right now.


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HarleyDavidson, Inc. (HOG) : Free Stock Analysis Report
 
Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research