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Should Value Investors Consider Geely Automobile (GELYY)?
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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 Geely Automobile Holdings Ltd. (GELYY - 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, Geely Automobile has a trailing twelve months PE ratio of 9.44, as you can see in the chart below:
This level actually compares quite favorably with the market at large, as the PE for the S&P 500 stands at about 17.79. If we focus on the long-term PE trend, Geely Automobile’s current PE level puts it much below its midpoint of 15.76 over the past five years.
Further, the stock’s PE also comparesfavorably with the Auto-Tires-Trucks Market’s trailing twelve months PE ratio, which stands at 9.68. At the very least, this indicates that the stock is a bit undervalued right now, compared to its peers.
We should also point out that Geely Automobile has a forward PE ratio (price relative to this year’s earnings) of 8.35, which is slightly lower than the current level. So, it is fair to say that a bit more value-oriented path may be ahead for Geely Automobile stock in the near term too.
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, Geely Automobile has a P/S ratio of just 1.09. This is quite lower than the S&P 500 average, which comes in at 3.24 right now. Also, as we can see in the chart below, this stands below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Geely Automobile currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Geely Automobile a solid choice for value investors.
What About the Stock Overall?
Though Geely Automobile 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 Score of A and a Momentum Score of F. This gives GELYY a Zacks VGM score — or its overarching fundamental grade — of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been bullish. The current year has seen one upward revision in the past sixty days compared to no downward revisions, while the next-year estimate also has seen one upward and no downward revisions in the same time period.
This has had a positive impact on the consensus estimate as the current-year consensus estimate has shot up by 9.7% in the past two months, while the next-year estimate has increased 9.5%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Geely Automobile Holdings Ltd. Price and Consensus
This bullish trend is why the stock has a Zacks Rank #1 (Strong Buy) and why we are looking for outperformance from the company in the near term.
Bottom Line
Geely Automobile is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, the company carries a sluggish industry rank (among Bottom 36% of more than 250 industries). In fact, over the past two years, the broader industry has underperformed the market at large as you can see below:
So, value investors might want to wait for the broader factors to turn around in this name first, but once that happens, this stock could be a more compelling pick.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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Should Value Investors Consider Geely Automobile (GELYY)?
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 Geely Automobile Holdings Ltd. (GELYY - 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, Geely Automobile has a trailing twelve months PE ratio of 9.44, as you can see in the chart below:
This level actually compares quite favorably with the market at large, as the PE for the S&P 500 stands at about 17.79. If we focus on the long-term PE trend, Geely Automobile’s current PE level puts it much below its midpoint of 15.76 over the past five years.
Further, the stock’s PE also comparesfavorably with the Auto-Tires-Trucks Market’s trailing twelve months PE ratio, which stands at 9.68. At the very least, this indicates that the stock is a bit undervalued right now, compared to its peers.
We should also point out that Geely Automobile has a forward PE ratio (price relative to this year’s earnings) of 8.35, which is slightly lower than the current level. So, it is fair to say that a bit more value-oriented path may be ahead for Geely Automobile stock in the near term too.
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, Geely Automobile has a P/S ratio of just 1.09. This is quite lower than the S&P 500 average, which comes in at 3.24 right now. Also, as we can see in the chart below, this stands below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Geely Automobile currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Geely Automobile a solid choice for value investors.
What About the Stock Overall?
Though Geely Automobile 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 Score of A and a Momentum Score of F. This gives GELYY a Zacks VGM score — or its overarching fundamental grade — of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been bullish. The current year has seen one upward revision in the past sixty days compared to no downward revisions, while the next-year estimate also has seen one upward and no downward revisions in the same time period.
This has had a positive impact on the consensus estimate as the current-year consensus estimate has shot up by 9.7% in the past two months, while the next-year estimate has increased 9.5%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Geely Automobile Holdings Ltd. Price and Consensus
Geely Automobile Holdings Ltd. Price and Consensus | Geely Automobile Holdings Ltd. Quote
This bullish trend is why the stock has a Zacks Rank #1 (Strong Buy) and why we are looking for outperformance from the company in the near term.
Bottom Line
Geely Automobile is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, the company carries a sluggish industry rank (among Bottom 36% of more than 250 industries). In fact, over the past two years, the broader industry has underperformed the market at large as you can see below:
So, value investors might want to wait for the broader factors to turn around in this name first, but once that happens, this stock could be a more compelling pick.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
See Latest Stocks Today >>