HOG vs. TSLA: Which Stock Is the Better Value Option?

Investors looking for stocks in the Automotive – Domestic sector might want to consider either Harley-Davidson (HOG) or Tesla (TSLA). But which of these two companies is the best option for those looking for undervalued stocks? Let’s 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 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, Harley-Davidson is sporting a Zacks Rank of #2 (Buy), while Tesla has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that HOG likely has seen a stronger improvement to its earnings outlook than TSLA has recently. 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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

HOG currently has a forward P/E ratio of 11.28, while TSLA has a forward P/E of 144.19. We also note that HOG has a PEG ratio of 0.46. 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. TSLA currently has a PEG ratio of 4.12.

Another notable valuation metric for HOG is its P/B ratio of 2.61. 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, TSLA has a P/B of 28.42.

These are just a few of the metrics contributing to HOG’s Value grade of A and TSLA’s Value grade of F.

HOG 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 HOG is likely the superior value option right now.

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