Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 company value investors might notice is Standard Motor Products (SMP). SMP is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 6.46 right now. For comparison, its industry sports an average P/E of 11. Over the last 12 months, SMP's Forward P/E has been as high as 10.76 and as low as 6.46, with a median of 9.39.
We should also highlight that SMP has a P/B ratio of 0.82. 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. This stock's P/B looks attractive against its industry's average P/B of 1.95. Over the past year, SMP's P/B has been as high as 1.18 and as low as 0.82, with a median of 1.06.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. SMP has a P/S ratio of 0.35. This compares to its industry's average P/S of 0.91.
Finally, investors should note that SMP has a P/CF ratio of 8.76. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 11.72. Within the past 12 months, SMP's P/CF has been as high as 12.56 and as low as 8.44, with a median of 10.65.
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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