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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
General Motors (GM - Free Report) is a stock many investors are watching right now. GM is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with P/E ratio of 6.41 right now. For comparison, its industry sports an average P/E of 10.56. Over the past year, GM's Forward P/E has been as high as 7.65 and as low as 5.15, with a median of 6.16.
Investors should also note that GM holds a PEG ratio of 0.76. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. GM's PEG compares to its industry's average PEG of 1.44. Over the last 12 months, GM's PEG has been as high as 1.28 and as low as 0.61, with a median of 0.75.
Another notable valuation metric for GM is its P/B ratio of 1.30. The P/B ratio pits a stock's market value against 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 2.49. Over the past 12 months, GM's P/B has been as high as 1.78 and as low as 1.05, with a median of 1.42.
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. GM has a P/S ratio of 0.36. This compares to its industry's average P/S of 0.73.
Finally, investors should note that GM has a P/CF ratio of 3.83. 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 6.58. Over the past year, GM's P/CF has been as high as 8.51 and as low as 3.12, with a median of 6.46.
These are only a few of the key metrics included in General Motors's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, GM looks like an impressive value stock at the moment.