Are Investors Undervaluing Standard Motor Products (SMP) Right Now?
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 proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of 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 to watch right now 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 holds a P/E ratio of 11.96, while its industry has an average P/E of 14.62. Over the last 12 months, SMP's Forward P/E has been as high as 16.16 and as low as 10.17, with a median of 12.58.
Another valuation metric that we should highlight is SMP's P/B ratio of 1.94. 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 company's current P/B looks solid when compared to its industry's average P/B of 3. Over the past year, SMP's P/B has been as high as 2.01 and as low as 1.53, with a median of 1.74.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SMP has a P/S ratio of 0.91. This compares to its industry's average P/S of 1.49.
Finally, investors will want to recognize that SMP has a P/CF ratio of 10.69. 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. SMP's P/CF compares to its industry's average P/CF of 16.48. Over the past 52 weeks, SMP's P/CF has been as high as 11.87 and as low as 8.08, with a median of 10.31.
Value investors will likely look at more than just these metrics, but the above data helps show that Standard Motor Products is likely undervalued currently. And when considering the strength of its earnings outlook, SMP sticks out at as one of the market's strongest value stocks.
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