Back to top

Image: Bigstock

Should Value Investors Buy Magna (MGA) Stock?

Read MoreHide Full Article

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Magna (MGA - Free Report) . MGA is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 11.49, while its industry has an average P/E of 17.21. Over the past 52 weeks, MGA's Forward P/E has been as high as 21.36 and as low as 3.92, with a median of 11.62.

Another valuation metric that we should highlight is MGA's P/B ratio of 1.75. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. MGA's current P/B looks attractive when compared to its industry's average P/B of 2.41. Within the past 52 weeks, MGA's P/B has been as high as 1.75 and as low as 0.66, with a median of 1.42.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. MGA has a P/S ratio of 0.58. This compares to its industry's average P/S of 0.6.

These are only a few of the key metrics included in Magna'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, MGA looks like an impressive value stock at the moment.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Magna International Inc. (MGA) - free report >>

Published in