Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Daimler AG stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Daimler has a trailing twelve months PE ratio of 8.81, as you can see in the chart below:
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This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.92. If we focus on the long-term PE trend, Daimler’s current PE is tad below its mid point levelover the past five years, with the number having remained somewhat stable over the past few months.
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Further, the stock’s PE also compares favorably with the Zacks classified Auto Manufacturers-Foreign industry’s trailing twelve months PE ratio, which stands at 10.72. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
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We should also point out that Daimler has a forward PE ratio (price relative to this year’s earnings) of 8.66, which is roughly in line with the current level. Hence the forward earnings estimates are already incorporated in the company’s current share price.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Daimler has a P/S ratio of about 0.49. This is much lower than the S&P 500 average, which comes in at 2.98 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
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As we can see, the stock is trading at its median value for the time period from a P/S metric. This does not provide us with a conclusive direction as to the relative valuation of the stock in comparison to its historical trend.
Broad Value Outlook
In aggregate, Daimler currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Daimler a solid choice for value investors.
What About the Stock Overall?
Though Daimler might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘A’. As a result, Sanderson Farms has a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. Both the current year and the next year has witnessed one upward estimate revision, compared to no downward revision over the last one month.
This has had a modest impact on the consensus estimate as the current year estimate has inched up by 1.4%, whereas the next year estimate has increased by 2.8%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This positive trend signifies bullish analyst sentiment, and its Zacks Rank #2 (Buy) indicates robust fundamentals and expectations of outperformance in the near term.
Bottom Line
Daimler is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, a robust industry rank (among the Top 29%) and a solid Zacks Rank instills investor confidence.
However, it is hard to get too excited about this company overall as over the past two years, the Zacks Auto Manufacturers-Foreign industry has underperformed the broader market, as you can see below:
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Despite the poor past performance of the industry, a good industry rank signals that the stock is likely to benefit from favorable broader factors in the immediate future. Add to this the positive estimate revisions and robust value metrics, and we believe that we have a strong value contender in Daimler.
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Can Daimler Be a Top Choice for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Daimler AG stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Daimler has a trailing twelve months PE ratio of 8.81, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.92. If we focus on the long-term PE trend, Daimler’s current PE is tad below its mid point levelover the past five years, with the number having remained somewhat stable over the past few months.
Further, the stock’s PE also compares favorably with the Zacks classified Auto Manufacturers-Foreign industry’s trailing twelve months PE ratio, which stands at 10.72. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Daimler has a forward PE ratio (price relative to this year’s earnings) of 8.66, which is roughly in line with the current level. Hence the forward earnings estimates are already incorporated in the company’s current share price.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Daimler has a P/S ratio of about 0.49. This is much lower than the S&P 500 average, which comes in at 2.98 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
As we can see, the stock is trading at its median value for the time period from a P/S metric. This does not provide us with a conclusive direction as to the relative valuation of the stock in comparison to its historical trend.
Broad Value Outlook
In aggregate, Daimler currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Daimler a solid choice for value investors.
What About the Stock Overall?
Though Daimler might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘A’. As a result, Sanderson Farms has a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. Both the current year and the next year has witnessed one upward estimate revision, compared to no downward revision over the last one month.
This has had a modest impact on the consensus estimate as the current year estimate has inched up by 1.4%, whereas the next year estimate has increased by 2.8%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Daimler AG Price and Consensus
Daimler AG Price and Consensus | Daimler AG Quote
This positive trend signifies bullish analyst sentiment, and its Zacks Rank #2 (Buy) indicates robust fundamentals and expectations of outperformance in the near term.
Bottom Line
Daimler is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, a robust industry rank (among the Top 29%) and a solid Zacks Rank instills investor confidence.
However, it is hard to get too excited about this company overall as over the past two years, the Zacks Auto Manufacturers-Foreign industry has underperformed the broader market, as you can see below:
Despite the poor past performance of the industry, a good industry rank signals that the stock is likely to benefit from favorable broader factors in the immediate future. Add to this the positive estimate revisions and robust value metrics, and we believe that we have a strong value contender in Daimler.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>