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HOG or TSLA: Which Is the Better Value Stock Right Now?

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Investors looking for stocks in the Automotive - Domestic sector might want to consider either Harley-Davidson (HOG - Free Report) or Tesla (TSLA - Free Report) . 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 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.

Right now, both Harley-Davidson and Tesla are sporting a Zacks Rank of # 1 (Strong Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one factor that value investors are interested in.

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.

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.

HOG currently has a forward P/E ratio of 10.78, while TSLA has a forward P/E of 96.95. We also note that HOG has a PEG ratio of 0.23. 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 2.50.

Another notable valuation metric for HOG is its P/B ratio of 2.57. 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, TSLA has a P/B of 29.29.

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

Both HOG and TSLA are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HOG is the superior value option right now.


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