Investors interested in stocks from the Automotive – Domestic sector have probably already heard of Fox Factory Holding (FOXF) 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.
Fox Factory Holding has a Zacks Rank of #2 (Buy), while Tesla has a Zacks Rank of #3 (Hold) right now. This means that FOXF’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
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.
FOXF currently has a forward P/E ratio of 15.02, while TSLA has a forward P/E of 57.90. We also note that FOXF has a PEG ratio of 0.74. 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 1.93.
Another notable valuation metric for FOXF is its P/B ratio of 3.45. The P/B ratio is used to compare a stock’s market value with its book value, which is defined as total assets minus total liabilities. For comparison, TSLA has a P/B of 19.19.
These are just a few of the metrics contributing to FOXF’s Value grade of B and TSLA’s Value grade of D.
FOXF stands above TSLA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that FOXF is the superior value option right now.
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