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Is Magna (MGA) Stock Undervalued Right Now?

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Zacks Equity Research
·3 min read
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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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 Magna (MGA). MGA is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 11.40, which compares to its industry's average of 32.95. Over the past year, MGA's Forward P/E has been as high as 21.36 and as low as 5.91, with a median of 12.55.

Investors will also notice that MGA has a PEG ratio of 1.62. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MGA's industry currently sports an average PEG of 2.81. Over the past 52 weeks, MGA's PEG has been as high as 6.48 and as low as 0.88, with a median of 2.60.

Another valuation metric that we should highlight is MGA's P/B ratio of 2.26. The P/B ratio pits a stock's market value against 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 2.41. Over the past year, MGA's P/B has been as high as 2.40 and as low as 0.83, with a median of 1.51.

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. MGA has a P/S ratio of 0.83. This compares to its industry's average P/S of 0.96.

These are only a few of the key metrics included in Magna'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, MGA looks like an impressive value stock at the moment.


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