MOD Vs. THRM: Which Stock Should Value Investors Buy Now?

By Zacks Investment ResearchStock MarketsMar 03, 2020 11:40PM ET

www.investing.com/analysis/mod-vs-thrm-which-stock-should-value-investors-buy-now-200513274

MOD Vs. THRM: Which Stock Should Value Investors Buy Now?

By Zacks Investment Research | Mar 03, 2020 11:40PM ET

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Investors with an interest in Automotive - Original Equipment stocks have likely encountered both Modine (MOD) and Gentherm (THRM). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Modine has a Zacks Rank of #1 (Strong Buy), while Gentherm has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that MOD is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

MOD currently has a forward P/E ratio of 7.18, while THRM has a forward P/E of 17.06. We also note that MOD has a PEG ratio of 0.72. 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. THRM currently has a PEG ratio of 1.31.

Another notable valuation metric for MOD is its P/B ratio of 0.65. 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, THRM has a P/B of 2.88.

These are just a few of the metrics contributing to MOD's Value grade of A and THRM's Value grade of C.

MOD 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 MOD is likely the superior value option right now.

Modine Manufacturing Company (MOD): Free Stock Analysis Report

Gentherm Inc (THRM): Free Stock Analysis Report

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Zacks Investment Research

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MOD Vs. THRM: Which Stock Should Value Investors Buy Now?

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