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BWA vs. GNTX: Which Stock Should Value Investors Buy Now?

Investors with an interest in Automotive - Original Equipment stocks have likely encountered both BorgWarner (BWA) and Gentex (GNTX). But which of these two stocks presents investors with the better value opportunity right now? 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 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.

BorgWarner and Gentex are sporting Zacks Ranks of #2 (Buy) and #4 (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 BWA has an improving earnings outlook. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.

BWA currently has a forward P/E ratio of 7.36, while GNTX has a forward P/E of 16.07. We also note that BWA has a PEG ratio of 0.27. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. GNTX currently has a PEG ratio of 1.16.

Another notable valuation metric for BWA is its P/B ratio of 1.04. 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, GNTX has a P/B of 2.82.

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

BWA 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 BWA is likely the superior value option right now.


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BorgWarner Inc. (BWA): Free Stock Analysis Report
 
Gentex Corporation (GNTX): Free Stock Analysis Report
 
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