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MOD or RACE: Which Is the Better Value Stock Right Now?

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Investors looking for stocks in the Automotive - Original Equipment sector might want to consider either Modine (MOD - Free Report) or Ferrari (RACE - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.

Currently, Modine has a Zacks Rank of #1 (Strong Buy), while Ferrari has a Zacks Rank of #3 (Hold). This means that MOD's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

MOD currently has a forward P/E ratio of 14.23, while RACE has a forward P/E of 44.85. We also note that MOD has a PEG ratio of 0.57. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. RACE currently has a PEG ratio of 3.77.

Another notable valuation metric for MOD is its P/B ratio of 2.60. 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, RACE has a P/B of 20.

Based on these metrics and many more, MOD holds a Value grade of A, while RACE has a Value grade of C.

MOD stands above RACE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MOD is the superior value option right now.


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