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 Fuji Heavy Industries Ltd. (FUJHY Quick QuoteFUJHY - Free Report) 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, Fuji Heavy Industries has a trailing twelve months PE ratio of 10.01, as you can see in the chart below:

This level is significantly favorable with the market at large, as the PE for the S&P 500 compares in at about 19.92. If we focus on the stock’s long-term PE trend, the current level puts Fuji Heavy Industries’ current PE ratio below its midpoint (which is 12.30) over the past three years.

Further, the stock’s PE also compares favorably with the Zacks classified Auto-Tires-Trucks sector’s trailing twelve months PE ratio, which stands at 11.05. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.

We should also point out that Fuji Heavy Industries has a forward PE ratio (price relative to this year’s earnings) of 11.17, so it is fair to expect an increase in the company’s share price in the near future.

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, Fuji Heavy Industries has a P/S ratio of about 0.28. This is significantly 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 well below the highs for this stock in particular over the past three years.

If anything, FUJHY is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.

Broad Value Outlook

In aggregate, Fuji Heavy Industries 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 Fuji Heavy Industries a solid choice for value investors.

What About the Stock Overall?

Though Fuji Heavy Industries 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 ‘A’ and a Momentum score of ‘C’. This gives Fuji Heavy Industries 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 mixed at best. The current quarter has seen no upward estimate revision in the past sixty days, compared to one lower, while the full year estimate has seen two upward revisions and no downward revision in the same time period.

This has had a mixed impact on the consensus estimate, as the current quarter consensus estimate has declined about 14% in the past two months, while the full year estimate has risen by about 2.2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:

This mixed trend indicates that while the stock’s growth story is intact over the medium term, analysts have some apprehensions about the stock in the immediate future.

Also consider the fact that the company boasts a Zacks Rank #1 (Strong Buy), which indicates robust fundamentals and expectations of outperformance in the near term.

Bottom Line

Fuji Heavy Industries 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 top Zacks Rank instills investor confidence.

However, it is hard to get too excited about this company overall as over the past one  year, the Zacks categorized 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 robust value metrics, and we believe that we have a strong value contender in Fuji Heavy Industries.

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