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Are Investors Undervaluing Meritor (MTOR) Right Now?

Zacks Equity Research

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.

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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Meritor (MTOR). MTOR is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 7.29. This compares to its industry's average Forward P/E of 10.96. MTOR's Forward P/E has been as high as 7.71 and as low as 4.75, with a median of 6.42, all within the past year.

Finally, investors will want to recognize that MTOR has a P/CF ratio of 5.98. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. MTOR's P/CF compares to its industry's average P/CF of 6.18. Over the past 52 weeks, MTOR's P/CF has been as high as 8.91 and as low as 4.21, with a median of 5.53.

These are just a handful of the figures considered in Meritor'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 MTOR is an impressive value stock right now.


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