Back to top

Image: Bigstock

Is Volkswagen AG (VWAGY) Stock Undervalued Right Now?

Read MoreHide Full Article

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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.

Volkswagen AG (VWAGY - Free Report) is a stock many investors are watching right now. VWAGY is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 10.99, which compares to its industry's average of 13.54. Over the past 52 weeks, VWAGY's Forward P/E has been as high as 14.65 and as low as 7.11, with a median of 9.14.

We also note that VWAGY holds a PEG ratio of 0.90. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. VWAGY's industry has an average PEG of 1.05 right now. Within the past year, VWAGY's PEG has been as high as 0.91 and as low as 0.18, with a median of 0.76.

Another notable valuation metric for VWAGY is its P/B ratio of 1.28. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.40. VWAGY's P/B has been as high as 1.44 and as low as 0.54, with a median of 0.68, over the past year.

Finally, our model also underscores that VWAGY has a P/CF ratio of 4.33. 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. VWAGY's current P/CF looks attractive when compared to its industry's average P/CF of 6.61. Within the past 12 months, VWAGY's P/CF has been as high as 5.30 and as low as 2.07, with a median of 2.70.

Value investors will likely look at more than just these metrics, but the above data helps show that Volkswagen AG is likely undervalued currently. And when considering the strength of its earnings outlook, VWAGY sticks out at as one of the market's strongest value stocks.


In-Depth Zacks Research for the Tickers Above


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


Volkswagen AG Unsponsored ADR (VWAGY) - free report >>

Published in