Investors with an interest in Automotive – Original Equipment stocks have likely encountered both BorgWarner (BWA) and Gentex (GNTX). 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.
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 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.
BorgWarner and Gentex are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BWA has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
BWA currently has a forward P/E ratio of 8.17, while GNTX has a forward P/E of 16.27. We also note that BWA has a PEG ratio of 0.88. 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. GNTX currently has a PEG ratio of 0.96.
Another notable valuation metric for BWA is its P/B ratio of 1.25. 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, GNTX has a P/B of 3.34.
These metrics, and several others, help BWA earn a Value grade of A, while GNTX has been given a Value grade of C.
BWA sticks out from GNTX in both our Zacks Rank and Style Scores models, so value investors will likely feel that BWA is the better option right now.
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BorgWarner Inc. (BWA) : Free Stock Analysis Report
Gentex Corporation (GNTX) : Free Stock Analysis Report