Should Value Investors Buy Magna (MGA) Stock?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader 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.
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.
Magna (MGA) is a stock many investors are watching right now. MGA is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock holds a P/E ratio of 11.51, while its industry has an average P/E of 16.56. Over the past 52 weeks, MGA's Forward P/E has been as high as 21.36 and as low as 3.92, with a median of 11.62.
Another notable valuation metric for MGA is its P/B ratio of 1.82. The P/B is a method of comparing a stock's market value to 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 2.41. Over the past year, MGA's P/B has been as high as 1.82 and as low as 0.66, with a median of 1.42.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. MGA has a P/S ratio of 0.61. This compares to its industry's average P/S of 0.65.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Magna is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, MGA feels like a great value stock at the moment.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Magna International Inc. (MGA) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
