Investors looking for stocks in the Automotive - Original Equipment sector might want to consider either China Yuchai (CYD) or Modine (MOD). 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both China Yuchai and Modine are holding a Zacks Rank of #1 (Strong Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
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.
CYD currently has a forward P/E ratio of 13.45, while MOD has a forward P/E of 30.36. We also note that CYD has a PEG ratio of 0.24. 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. MOD currently has a PEG ratio of 0.89.
Another notable valuation metric for CYD is its P/B ratio of 0.86. 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, MOD has a P/B of 10.24.
Based on these metrics and many more, CYD holds a Value grade of A, while MOD has a Value grade of D.
Both CYD and MOD are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CYD is the superior value option right now.
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China Yuchai International Limited (CYD): Free Stock Analysis Report
Modine Manufacturing Company (MOD): Free Stock Analysis Report