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Are Investors Undervaluing Fiat Chrysler (FCAU) Right Now?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is Fiat Chrysler (FCAU - Free Report) . FCAU is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 8.91, which compares to its industry's average of 13.65. Over the last 12 months, FCAU's Forward P/E has been as high as 13,013.31 and as low as -2,085.57, with a median of 5.31.

Another valuation metric that we should highlight is FCAU's P/B ratio of 0.83. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 0.84. Within the past 52 weeks, FCAU's P/B has been as high as 1.03 and as low as 0.39, with a median of 0.80.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. FCAU has a P/S ratio of 0.23. This compares to its industry's average P/S of 0.39.

Finally, investors should note that FCAU has a P/CF ratio of 4.19. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 4.93. FCAU's P/CF has been as high as 4.20 and as low as 0.74, with a median of 1.57, all within the past year.

These are only a few of the key metrics included in Fiat Chrysler's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, FCAU looks like an impressive value stock at the moment.


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