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Investors interested in Automotive - Original Equipment stocks are likely familiar with Continental AG (CTTAY) and Mobileye Global (MBLY). 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Continental AG has a Zacks Rank of #2 (Buy), while Mobileye Global has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CTTAY likely has seen a stronger improvement to its earnings outlook than MBLY has recently. But this is just one piece of the puzzle for value investors.
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.
CTTAY currently has a forward P/E ratio of 9.85, while MBLY has a forward P/E of 76.13. We also note that CTTAY has a PEG ratio of 0.42. 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. MBLY currently has a PEG ratio of 11.13.
Another notable valuation metric for CTTAY is its P/B ratio of 0.87. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, MBLY has a P/B of 1.12.
Based on these metrics and many more, CTTAY holds a Value grade of A, while MBLY has a Value grade of F.
CTTAY stands above MBLY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CTTAY is the superior value option right now.
Zacks Investment Research
U.S. stocks were higher, with the Nasdaq Composite gaining around 200 points on Thursday.
Shares of HubSpot, Inc. rose sharply during Thursday's session after the company reported better-than-expected third-quarter financial results and issued FY24 guidance above estimates.
HubSpot reported quarterly earnings of $2.22 per share, which beat the analyst consensus estimate of $1.91. Quarterly revenue clocked in at $669.7 million which beat the analyst consensus estimate of $646.9 million and is an increase over sales of $557.55 million from the same period last year.
HubSpot shares jumped 7.9% to $645.11 on Thursday.
Here are some other big stocks recording gains in today's session.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Shares of ride-hailing service provider Lyft has spiked over 28% this morning, buoyed by the company’s strong third-quarter performance and promising outlook for Q4 and the full year. This rally helps close the performance gap with its rival, Uber , whose stock has risen about 20% year-to-date. With Lyft now catching up, is it time to buy the stock?
Third-Quarter Highlights: A Turnaround in Progress
Lyft's Q3 results signal a clear path to growth. Gross bookings for the quarter totaled $4.1 billion, representing a 16% year-over-year increase. This uptick was driven by strong demand across its core rideshare business and continued growth in its bikes and scooters segments. The company reported a 9% rise in active riders, while ride frequency grew by 6%, spurred by strategic initiatives such as back-to-school campaigns and new product launches.
Lyft’s ride frequency, which is the average number of rides taken by each active rider, increased for the seventh consecutive quarter.
Revenue for Q3 was $1.52 billion, a 31.5% increase year over year, beating analysts’ estimates of $1.44 billion. The company’s revenue margin improved, underscoring its ability to manage rider and driver incentives more efficiently. Notably, incentive costs per ride dropped 17% compared to the same period last year, exceeding Lyft's multi-year target.
On the profitability front, Lyft delivered an adjusted net income of $118.1 million, up from $92.3 million in Q3 2023. Free cash flow for the quarter was a robust $243 million, and Lyft ended the period with $1.9 billion in unrestricted cash and short-term investments.
A Promising Outlook for Growth
Lyft's management remains optimistic about the company’s future, thanks to ongoing innovations and heightened customer engagement. In 2024, Lyft introduced 33 new products and features, which contributed to record levels of driver and rider activity. The number of driver hours and active riders hit all-time highs during Q3, while commute rides—a key growth indicator—surpassed pre-pandemic levels recorded in 2019.
Lyft's bikes and scooters business also saw unprecedented growth, with quarterly ride numbers reaching historic highs. The company is expanding geographically, with significant inroads into Canada, including a recent push to onboard drivers in Winnipeg.
Emerging Growth Drivers: Advertising and Strategic Partnerships
Lyft Media, the company’s growing advertising division, has emerged as a notable growth engine. In-app advertising revenue nearly tripled year-over-year in Q3, highlighting the platform’s increasing attractiveness to advertisers. Further, it is improving its ad-tech platform to help drive and retain advertisers.
Additionally, Lyft is capitalizing on strategic partnerships to diversify its service offerings. Its collaboration with DoorDash strengthens its food delivery presence, while partnerships with companies such as Mobileye , Nexar, and May Mobility underscore its commitment to developing autonomous vehicle technology.
Revised Full-Year Outlook
For Q4, Lyft expects gross bookings between $4.28 billion and $4.35 billion, surpassing analysts’ expectations of $4.23 billion. It projects an adjusted EBITDA of approximately $100 million to $105 million. Further, adjusted EBITDA margin will likely be approximately 2.3% to 2.4%.
Lyft also revised its full-year 2024 guidance, expecting gross bookings to grow by approximately 17% year-over-year. The company projects rides growth in the mid-teens and an adjusted EBITDA margin of 2.3% (up from 2.1%). Lyft's free cash flow is likely to exceed $650 million.
Should You Buy Lyft Stock?
Despite its recent underperformance compared to Uber, Lyft’s stellar Q3 performance and optimistic outlook could make it an attractive buy for growth-oriented investors.
Analysts maintain a “hold” consensus, but the company’s strong financials, growing driver and rider base, and investments in initiatives like building partnerships and enhancing its ad tech platform suggest it’s well-positioned for long-term growth.
For investors looking to capitalize on the ride-hailing sector’s rebound and Lyft’s potential in emerging segments like media and autonomous vehicles, now might be a good time to consider adding Lyft to portfolios.
Analysts have an average price target of $15.18 on Lyft stock, which will likely be revised upward, given the company's solid performance and strong guidance.
On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policyhere.
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