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OSK vs. THRM: Which Stock Is the Better Value Option?

Zacks Equity Research
Updated
Ross Stores (ROST) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a likely beat in its next quarterly report.

Investors looking for stocks in the Automotive - Original Equipment sector might want to consider either Oshkosh (OSK) or 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.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Oshkosh and Gentherm are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that OSK is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

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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.

OSK currently has a forward P/E ratio of 12.08, while THRM has a forward P/E of 16.92. We also note that OSK has a PEG ratio of 0.66. 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. THRM currently has a PEG ratio of 0.68.

Another notable valuation metric for OSK is its P/B ratio of 2.19. 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, THRM has a P/B of 2.38.

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

OSK sticks out from THRM in both our Zacks Rank and Style Scores models, so value investors will likely feel that OSK is the better option right now.


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Oshkosh Corporation (OSK) : Free Stock Analysis Report
 
Gentherm Inc (THRM) : Free Stock Analysis Report
 
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Zacks Investment Research