Investors interested in Automotive - Original Equipment stocks are likely familiar with Strattec Security (STRT) and Ferrari (RACE). But which of these two companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Strattec Security and Ferrari are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that STRT likely has seen a stronger improvement to its earnings outlook than RACE has recently. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

STRT currently has a forward P/E ratio of 15.11, while RACE has a forward P/E of 51.39. We also note that STRT has a PEG ratio of 1.51. 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. RACE currently has a PEG ratio of 4.13.

Another notable valuation metric for STRT is its P/B ratio of 0.75. 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, RACE has a P/B of 30.02.

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

STRT sticks out from RACE in both our Zacks Rank and Style Scores models, so value investors will likely feel that STRT is the better option right now.

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Strattec Security Corporation (STRT) : Free Stock Analysis Report

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