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Is Standard Motor Products (SMP) Stock Undervalued Right Now?
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.
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 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 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 has a Forward P/E ratio of 9.43. This compares to its industry's average Forward P/E of 12.15. SMP's Forward P/E has been as high as 12.83 and as low as 8.23, with a median of 10.80, all within the past year.
Another notable valuation metric for SMP is its P/B ratio of 1.59. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. SMP's current P/B looks attractive when compared to its industry's average P/B of 2.65. Over the past 12 months, SMP's P/B has been as high as 2.01 and as low as 1.33, with a median of 1.61.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SMP has a P/S ratio of 0.73. This compares to its industry's average P/S of 1.14.
Finally, our model also underscores that SMP has a P/CF ratio of 8.68. 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 10.39. SMP's P/CF has been as high as 11.04 and as low as 7.30, with a median of 8.57, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Standard Motor Products is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SMP feels like a great value stock at the moment.