Are Investors Undervaluing Standard Motor Products (SMP) Right Now?
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
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 a P/E ratio of 10.09, which compares to its industry's average of 11.74. Over the last 12 months, SMP's Forward P/E has been as high as 10.90 and as low as 7.84, with a median of 9.76.
Another valuation metric that we should highlight is SMP's P/B ratio of 1.31. 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. SMP's current P/B looks attractive when compared to its industry's average P/B of 2.85. SMP's P/B has been as high as 1.69 and as low as 1.15, with a median of 1.28, over the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SMP has a P/S ratio of 0.6. This compares to its industry's average P/S of 1.16.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Standard Motor Products is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SMP feels like a great value stock at the moment.
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Standard Motor Products, Inc. (SMP) : Free Stock Analysis Report
