CYD vs. HSAI: Which Stock Should Value Investors Buy Now?

Investors interested in Automotive - Original Equipment stocks are likely familiar with China Yuchai (CYD) and Hesai Group Sponsored ADR (HSAI). But which of these two stocks presents investors with the better value opportunity right now? 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 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.

Right now, both China Yuchai and Hesai Group Sponsored ADR are sporting a Zacks Rank of #2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture for value investors.

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.

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.

CYD currently has a forward P/E ratio of 13.33, while HSAI has a forward P/E of 25.08. We also note that CYD has a PEG ratio of 0.35. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. HSAI currently has a PEG ratio of 0.63.

Another notable valuation metric for CYD is its P/B ratio of 0.97. 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, HSAI has a P/B of 1.79.

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

Both CYD and HSAI 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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This article originally published on Zacks Investment Research (zacks.com).

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