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 Delphi Automotive PLC 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, Delphi has a trailing twelve months PE ratio of 12.52, as you can see in the chart below:
This level actually compares pretty favorably with the market at large as well, as the PE for the S&P 500 stands at about 20.21. If we focus on the PE trend, Delphi’s current PE level is slightly above its midpoint (which stands at 12.08) over the last one year, with the number having risen rapidly over the last few months.
Further, the stock’s PE also compares favorably with the Zacks classified Auto/Truck Original Equipment industry’s trailing twelve months PE ratio, which stands at 13.09. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Delphi has a forward PE ratio (price relative to this year’s earnings) of 12.06, so it is fair to say that a slightly more value-oriented path may be ahead for the stock in the near term too.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate). The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
Delphi’s PEG ratio stands at just 0.89, compared with the Zacks Auto/Truck Original Equipment industry average of 0.99. This suggests a decent undervalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregateDelphi currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Delphi a decent choice for value investors.
What About the Stock Overall?
Though Delphi 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 ‘B’. This gives Delphi 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 decidedly bullish. The current year has seen seven estimates go higher in the past sixty days compared to two lower, while the next year estimate has seen four upward revisions compared to two downward revisions in the same time period.
This has had a positive impact on the consensus estimate as the current year consensus estimate has increased by 2.2% in the last sixty days, while the next year estimate has improved by 1.6%.
You can see the consensus estimate trend and recent price action for the stock in the chart below:
The stock holds a Zacks Rank #3 (Hold), which indicates expectations of an in-line performance from the company in the near term. However, Delphi is enjoying bullish analyst sentiment, as indicated by the positive estimate revisions, and this works in the company’s favor.
Bottom Line
Delphi is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Despite having a Zacks Rank #3, the stock belongs to a strong industry (which ranks among the Top 9% out of more than 250 industries), which indicates that broader factors are favorable for the company in the immediate future.
In fact, on a year-to-date basis, the Zacks categorized Auto/Truck Original Equipment industryhas clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals and broader factors indicate that this stock could be a compelling pick.
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Does Delphi Offer a Good Value Buying Opportunity Right Now?
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 Delphi Automotive PLC 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, Delphi has a trailing twelve months PE ratio of 12.52, as you can see in the chart below:
This level actually compares pretty favorably with the market at large as well, as the PE for the S&P 500 stands at about 20.21. If we focus on the PE trend, Delphi’s current PE level is slightly above its midpoint (which stands at 12.08) over the last one year, with the number having risen rapidly over the last few months.
Further, the stock’s PE also compares favorably with the Zacks classified Auto/Truck Original Equipment industry’s trailing twelve months PE ratio, which stands at 13.09. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Delphi has a forward PE ratio (price relative to this year’s earnings) of 12.06, so it is fair to say that a slightly more value-oriented path may be ahead for the stock in the near term too.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate). The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
Delphi’s PEG ratio stands at just 0.89, compared with the Zacks Auto/Truck Original Equipment industry average of 0.99. This suggests a decent undervalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregateDelphi currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Delphi a decent choice for value investors.
What About the Stock Overall?
Though Delphi 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 ‘B’. This gives Delphi 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 decidedly bullish. The current year has seen seven estimates go higher in the past sixty days compared to two lower, while the next year estimate has seen four upward revisions compared to two downward revisions in the same time period.
This has had a positive impact on the consensus estimate as the current year consensus estimate has increased by 2.2% in the last sixty days, while the next year estimate has improved by 1.6%.
You can see the consensus estimate trend and recent price action for the stock in the chart below:
Delphi Automotive PLC Price and Consensus
Delphi Automotive PLC Price and Consensus | Delphi Automotive PLC Quote
The stock holds a Zacks Rank #3 (Hold), which indicates expectations of an in-line performance from the company in the near term. However, Delphi is enjoying bullish analyst sentiment, as indicated by the positive estimate revisions, and this works in the company’s favor.
Bottom Line
Delphi is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Despite having a Zacks Rank #3, the stock belongs to a strong industry (which ranks among the Top 9% out of more than 250 industries), which indicates that broader factors are favorable for the company in the immediate future.
In fact, on a year-to-date basis, the Zacks categorized Auto/Truck Original Equipment industryhas clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals and broader factors indicate that this stock could be a compelling pick.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>