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

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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 stocks presents investors with the better value opportunity right now? Let's 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.

Both Harley-Davidson and Tesla have a Zacks Rank of # 1 (Strong Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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 9.56, while TSLA has a forward P/E of 84.85. We also note that HOG has a PEG ratio of 0.21. 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 2.18.

Another notable valuation metric for HOG is its P/B ratio of 2.46. 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 26.22.

These are just a few of the metrics contributing to HOG's Value grade of A and TSLA's 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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