Investors interested in stocks from the Automotive - Original Equipment sector have probably already heard of 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.

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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Both Strattec Security and Ferrari have a Zacks Rank of # 1 (Strong Buy) right now. 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 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

STRT currently has a forward P/E ratio of 21.06, while RACE has a forward P/E of 51.74. We also note that STRT has a PEG ratio of 2.11. 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 4.75.

Another notable valuation metric for STRT is its P/B ratio of 0.75. 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, RACE has a P/B of 30.72.

These metrics, and several others, help STRT earn a Value grade of A, while RACE has been given a Value grade of D.

Both STRT and RACE are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that STRT is the superior value option right now.

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Strattec Security Corporation (STRT) : Free Stock Analysis Report

Ferrari N.V. (RACE) : Free Stock Analysis Report

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