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LKQ vs. GPC: Which Stock Is the Better Value Option?

Zacks

Investors interested in Automotive – Replacement Parts stocks are likely familiar with LKQ (LKQ) and Genuine Parts (GPC). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

LKQ and Genuine Parts are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that LKQ’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

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.


Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

LKQ currently has a forward P/E ratio of 12.51, while GPC has a forward P/E of 17.07. We also note that LKQ has a PEG ratio of 0.83. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company’s expected earnings growth rate. GPC currently has a PEG ratio of 2.57.

Another notable valuation metric for LKQ is its P/B ratio of 1.90. 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, GPC has a P/B of 3.98.

These metrics, and several others, help LKQ earn a Value grade of B, while GPC has been given a Value grade of C.

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


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Zacks Investment Research
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