Investors looking for stocks in the Automotive - Original Equipment sector might want to consider either Dana (DAN) or Gentex (GNTX). 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.

Dana and Gentex are sporting Zacks Ranks of #1 (Strong Buy) and #5 (Strong Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DAN has an improving earnings outlook. But this is only part of the picture 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 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.

DAN currently has a forward P/E ratio of 8.59, while GNTX has a forward P/E of 12.57. We also note that DAN has a PEG ratio of 0.44. 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. GNTX currently has a PEG ratio of 0.89.

Another notable valuation metric for DAN is its P/B ratio of 1.43. 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, GNTX has a P/B of 2.20.

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

DAN has seen stronger estimate revision activity and sports more attractive valuation metrics than GNTX, so it seems like value investors will conclude that DAN is the superior option right now.

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Dana Incorporated (DAN) : Free Stock Analysis Report

Gentex Corporation (GNTX) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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