Back to top

Image: Bigstock

Is Standard Motor Products (SMP) 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.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is Standard Motor Products (SMP - Free Report) . SMP is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 9.07 right now. For comparison, its industry sports an average P/E of 12.51. Over the past year, SMP's Forward P/E has been as high as 16.16 and as low as 9.07, with a median of 11.58.

Another valuation metric that we should highlight is SMP's P/B ratio of 1.47. 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 2.66. Over the past year, SMP's P/B has been as high as 2.01 and as low as 1.47, with a median of 1.70.

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. SMP has a P/S ratio of 0.71. This compares to its industry's average P/S of 1.22.

Finally, investors will want to recognize that SMP has a P/CF ratio of 7.80. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 10.80. Within the past 12 months, SMP's P/CF has been as high as 11.04 and as low as 7.80, with a median of 9.05.

These are just a handful of the figures considered in Standard Motor Products's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that SMP is an impressive value stock right now.


In-Depth Zacks Research for the Tickers Above


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


Standard Motor Products, Inc. (SMP) - free report >>

Published in