F or FSS: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Automotive – Domestic sector might want to consider either Ford Motor Company (F) or Federal Signal (FSS). 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.
Currently, Ford Motor Company has a Zacks Rank of #2 (Buy), while Federal Signal has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that F likely has seen a stronger improvement to its earnings outlook than FSS has recently. 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.
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.
F currently has a forward P/E ratio of 8.37, while FSS has a forward P/E of 25.19. We also note that F has a PEG ratio of 0.31. 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. FSS currently has a PEG ratio of 1.80.
Another notable valuation metric for F is its P/B ratio of 1.49. The P/B ratio is used to compare a stock’s market value with its book value, which is defined as total assets minus total liabilities. For comparison, FSS has a P/B of 5.2.
Based on these metrics and many more, F holds a Value grade of A, while FSS has a Value grade of C.
F is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that F is likely the superior value option right now.
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Ford Motor Company (F) : Free Stock Analysis Report
Federal Signal Corporation (FSS) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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