Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One stock to keep an eye on is Standard Motor Products (SMP). SMP is currently sporting a Zacks Rank #2 (Buy) and an A for Value.
Another valuation metric that we should highlight is SMP's P/B ratio of 1.23. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.53. SMP's P/B has been as high as 1.28 and as low as 0.74, with a median of 1.04, over the past year.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SMP has a P/S ratio of 0.53. This compares to its industry's average P/S of 0.9.
These are just a handful of the figures considered in Standard Motor Products's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that SMP is an impressive value stock right now.
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Standard Motor Products, Inc. (SMP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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