GM vs. TSLA: Which Stock Should Value Investors Buy Now?

Investors interested in stocks from the Automotive – Domestic sector have probably already heard of General Motors (GM Quick QuoteGM – Free Report) and Tesla (TSLA Quick QuoteTSLA – Free Report) . 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, General Motors has a Zacks Rank of #2 (Buy), while Tesla has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GM has an improving earnings outlook. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

GM currently has a forward P/E ratio of 4.84, while TSLA has a forward P/E of 116.51. We also note that GM has a PEG ratio of 0.38. 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. TSLA currently has a PEG ratio of 5.75.

Another notable valuation metric for GM is its P/B ratio of 0.76. 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 17.24.

These metrics, and several others, help GM earn a Value grade of A, while TSLA has been given a Value grade of D.

GM stands above TSLA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GM is the superior value option right now.