PLOW vs. CARG: Which Stock Should Value Investors Buy Now?
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Investors interested in Automotive - Replacement Parts stocks are likely familiar with Douglas Dynamics (PLOW) and CarGurus (CARG). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Douglas Dynamics and CarGurus are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This means that PLOW's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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.
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.
PLOW currently has a forward P/E ratio of 15.94, while CARG has a forward P/E of 19.63. We also note that PLOW has a PEG ratio of 1.14. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CARG currently has a PEG ratio of 1.27.
Another notable valuation metric for PLOW is its P/B ratio of 2.52. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CARG has a P/B of 7.19.
Based on these metrics and many more, PLOW holds a Value grade of A, while CARG has a Value grade of D.
PLOW stands above CARG thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PLOW is the superior value option right now.
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Douglas Dynamics, Inc. (PLOW) : Free Stock Analysis Report
CarGurus, Inc. (CARG) : Free Stock Analysis Report