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Should Value Investors Pick DENSO Corporation (DNZOY) Stock?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put DENSO Corporation (DNZOY - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, DENSO Corporation has a trailing twelve months PE ratio of 15.1, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.5. While DENSO Corporation’s current PE level puts it above its midpoint of 14.5 over the past five years, it stands below the highs for the stock, leaving scope for entry still.
However, the stock’s PE stands above the Zacks Auto sector’s trailing twelve months PE ratio, which stands at 12.4. This indicates that the stock is relatively overvalued right now, compared to its peers.
We should also point out that DENSO Corporation’s forward PE is roughly same as its trailing twelve months value, so we might say that the forward earnings estimates are incorporated in the company’s share price as of now. We define forward PE as current price relative to the Zacks Consensus Estimate for the current fiscal year.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, DENSO Corporation has a P/S ratio of about 0.9. This is much lower than the S&P 500 average, which comes in at 3.2 right now. This suggests that the stock is undervalued from the P/S aspect as well.
Broad Value Outlook
In aggregate, DENSO Corporation currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes DENSO Corporation a solid choice for value investors.
What About the Stock Overall?
Though DENSO Corporation might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score and Momentum Score of B, each. This gives DNZOY a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been somewhat encouraging. The current quarter and full year estimates have seen one upward revision each over the past 60 days, compared with no downward revisions.
This has had a somewhat positive impact on the consensus estimate, as the full year consensus estimate has risen by 6.5% in the past two months, while the current quarter estimate has remained unchanged.
Given this bullish trend, the stock boasts a Zacks Rank #1 (Strong Buy), which indicates why we are looking for out performance from the company in the near term.
Bottom Line
DENSO Corporation is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Further, this Zacks Rank #1 company has a solid Zacks Industry Rank (among Top 18% of more than 250 industries), which hints at favorable broader factors. In fact, over the past two years, the industry has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Image: Bigstock
Should Value Investors Pick DENSO Corporation (DNZOY) Stock?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
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One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put DENSO Corporation (DNZOY - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, DENSO Corporation has a trailing twelve months PE ratio of 15.1, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.5. While DENSO Corporation’s current PE level puts it above its midpoint of 14.5 over the past five years, it stands below the highs for the stock, leaving scope for entry still.
However, the stock’s PE stands above the Zacks Auto sector’s trailing twelve months PE ratio, which stands at 12.4. This indicates that the stock is relatively overvalued right now, compared to its peers.
We should also point out that DENSO Corporation’s forward PE is roughly same as its trailing twelve months value, so we might say that the forward earnings estimates are incorporated in the company’s share price as of now. We define forward PE as current price relative to the Zacks Consensus Estimate for the current fiscal year.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, DENSO Corporation has a P/S ratio of about 0.9. This is much lower than the S&P 500 average, which comes in at 3.2 right now. This suggests that the stock is undervalued from the P/S aspect as well.
Broad Value Outlook
In aggregate, DENSO Corporation currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes DENSO Corporation a solid choice for value investors.
What About the Stock Overall?
Though DENSO Corporation might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score and Momentum Score of B, each. This gives DNZOY a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been somewhat encouraging. The current quarter and full year estimates have seen one upward revision each over the past 60 days, compared with no downward revisions.
This has had a somewhat positive impact on the consensus estimate, as the full year consensus estimate has risen by 6.5% in the past two months, while the current quarter estimate has remained unchanged.
Given this bullish trend, the stock boasts a Zacks Rank #1 (Strong Buy), which indicates why we are looking for out performance from the company in the near term.
Bottom Line
DENSO Corporation is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Further, this Zacks Rank #1 company has a solid Zacks Industry Rank (among Top 18% of more than 250 industries), which hints at favorable broader factors. In fact, over the past two years, the industry has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Download the new report now>>