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Is Goodyear (GT) Stock Undervalued Right Now?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Goodyear (GT - Free Report) . GT is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 10.94, which compares to its industry's average of 12.09. Over the last 12 months, GT's Forward P/E has been as high as 10.94 and as low as 5.64, with a median of 7.20.

Another valuation metric that we should highlight is GT's P/B ratio of 0.72. The P/B ratio is used to compare a stock's market value with 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 0.80. Over the past year, GT's P/B has been as high as 1 and as low as 0.50, with a median of 0.74.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. 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 0.24. This compares to its industry's average P/S of 0.39.

Finally, our model also underscores that GT has a P/CF ratio of 3.71. 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 4.15. Within the past 12 months, GT's P/CF has been as high as 4.08 and as low as 2.05, with a median of 3.04.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Goodyear is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, GT feels like a great value stock at the moment.


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