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Is China Yuchai (CYD) Stock Undervalued Right Now?

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·2 min read
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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.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is China Yuchai (CYD). CYD is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 6.92 right now. For comparison, its industry sports an average P/E of 16.08. Over the last 12 months, CYD's Forward P/E has been as high as 9.79 and as low as 3, with a median of 7.02.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CYD has a P/S ratio of 0.25. This compares to its industry's average P/S of 0.65.

Finally, investors should note that CYD has a P/CF ratio of 4.62. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 8.82. Over the past 52 weeks, CYD's P/CF has been as high as 5.72 and as low as 2.16, with a median of 3.94.

These are only a few of the key metrics included in China Yuchai's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, CYD looks like an impressive value stock at the moment.


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