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Is Goodyear (GT) Stock Undervalued Right Now?

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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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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 company value investors might notice is Goodyear (GT - Free Report) . GT is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 7.26, which compares to its industry's average of 8.02. Over the last 12 months, GT's Forward P/E has been as high as 9.42 and as low as 5.64, with a median of 6.99.

Another valuation metric that we should highlight is GT's P/B ratio of 0.99. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.08. GT's P/B has been as high as 1.82 and as low as 0.90, with a median of 1.18, over the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. GT has a P/S ratio of 0.32. This compares to its industry's average P/S of 0.46.

Finally, we should also recognize that GT has a P/CF ratio of 3.94. 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. GT's current P/CF looks attractive when compared to its industry's average P/CF of 4.35. GT's P/CF has been as high as 7.60 and as low as 3.57, with a median of 5.50, all within the past year.

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


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