Investors interested in stocks from the Automotive - Retail and Wholesale - Parts sector have probably already heard of Driven Brands Holdings Inc. (DRVN) and Genuine Parts (GPC). 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, Driven Brands Holdings Inc. is sporting a Zacks Rank of #2 (Buy), while Genuine Parts has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DRVN has 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.
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.
DRVN currently has a forward P/E ratio of 9.67, while GPC has a forward P/E of 16.42. We also note that DRVN has a PEG ratio of 1.86. 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. GPC currently has a PEG ratio of 2.35.
Another notable valuation metric for DRVN is its P/B ratio of 2.34. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, GPC has a P/B of 3.85.
These metrics, and several others, help DRVN earn a Value grade of A, while GPC has been given a Value grade of C.
DRVN 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 DRVN is likely the superior value option right now.
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Driven Brands Holdings Inc. (DRVN): Free Stock Analysis Report
Genuine Parts Company (GPC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).