We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Should Value Investors Consider Fuji Heavy Industries (FUJHY) a Great Pick
Read MoreHide Full Article
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 - 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 5.29, 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 20.34. If we focus on the long-term PE trend, Fuji Heavy Industries’ current PE level puts it below its midpoint over the past three years.
Further, the stock’s PE also compares favorably with the Zacks classified Auto-Tires-Trucks industry’s trailing twelve months PE ratio, which stands at 11.24. 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 just 8.82, so it is fair to say that the stock price might appreciate in 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 0.83. This is a bit lower than the S&P 500 average, which comes in at 3.16 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 few 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, and some of its other key metrics make this pretty clear too.
For example, its P/CF ratio (another great indicator of value) comes in at 6.02 which is a bit better than the industry average of 6.40. Clearly, FUJHY is a solid choice on the value front from multiple angles.
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 ‘F’. This gives FUJHY 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 much discouraging. The current quarter has seen no estimate to go higher in the past sixty days compared to one lower, while the full year estimate has also seen no upward and two downward movements in the same time period.
This has had a significant impact on the consensus estimate as the current quarter consensus estimate has dropped 4% in the past two months, while the full year estimate has fallen by 10.2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This bearish trend is why the stock has just a Zacks Rank #4 (Sell) and why we are looking for in-line performance from the company 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. Moreover, a strong industry rank (Top 25% out of more than 250 industries) further strengthens its growth potential.
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500.
Image: Bigstock
Why Should Value Investors Consider Fuji Heavy Industries (FUJHY) a Great Pick
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 - 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 5.29, 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 20.34. If we focus on the long-term PE trend, Fuji Heavy Industries’ current PE level puts it below its midpoint over the past three years.
Further, the stock’s PE also compares favorably with the Zacks classified Auto-Tires-Trucks industry’s trailing twelve months PE ratio, which stands at 11.24. 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 just 8.82, so it is fair to say that the stock price might appreciate in 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 0.83. This is a bit lower than the S&P 500 average, which comes in at 3.16 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 few 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, and some of its other key metrics make this pretty clear too.
For example, its P/CF ratio (another great indicator of value) comes in at 6.02 which is a bit better than the industry average of 6.40. Clearly, FUJHY is a solid choice on the value front from multiple angles.
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 ‘F’. This gives FUJHY 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 much discouraging. The current quarter has seen no estimate to go higher in the past sixty days compared to one lower, while the full year estimate has also seen no upward and two downward movements in the same time period.
This has had a significant impact on the consensus estimate as the current quarter consensus estimate has dropped 4% in the past two months, while the full year estimate has fallen by 10.2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Fuji Heavy Industries Ltd. Price and Consensus
Fuji Heavy Industries Ltd. Price and Consensus | Fuji Heavy Industries Ltd. Quote
This bearish trend is why the stock has just a Zacks Rank #4 (Sell) and why we are looking for in-line performance from the company 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. Moreover, a strong industry rank (Top 25% out of more than 250 industries) further strengthens its growth potential.
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500.
See today's Zacks ""Strong Sells"" absolutely free >>.