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 Navistar International Corporation 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, Navistar International has a trailing twelve months PE ratio of 5.58, as you can see in the chart below:
This level actually compares favorably with the market at large, as the PE for the S&P 500 stands at about 20.19. However, if we focus on the long-term PE trend, Navistar International’s current PE level puts it way above its midpoint of -6.49 over the past five years.
.jpg)
The stock’s PE also compares favorably with the Auto Tires Trucks Market’s trailing twelve months PE ratio, which stands at 12.27. This indicates that the stock is undervalued right now, compared to its peers.
Meanwhile Navistar International has a forward PE ratio (price relative to this year’s earnings) of 15.63, which is much higher than the current level. So, so it is fair to expect an increase in the share price in the near term.
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, Navistar International has a P/S ratio of just 0.32. This is quite lower than the S&P 500 average, which comes in at 3.49x right now. Also, as we can see in the chart below, this is much below the highs for this stock in particular over the past few years.
.jpg)
Broad Value Outlook
In aggregate, Navistar International currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Navistar International a solid choice for value investors.
What About the Stock Overall?
Though Navistar International 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 of A and a Momentum Score of F. This gives NAV 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 downbeat. While the current-year estimate has seen no upward and four downward movements, the next-year estimate has seen one upward and three downward movements over the past two months.
This has had a negative effect on the consensus estimate. While the current-year consensus has plunged 25% over the past two months, the next-year estimate has dropped 10.6%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Despite such bearish analyst sentiments, the stock has a Zacks Rank #3 (Hold) and it is the reason why we are looking for in line performance from the company in the near term.
Bottom Line
Navistar International is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Besides a sluggish industry rank (among Bottom 28% of more than 250 industries), with a Zacks Rank #3, it is hard to get too excited about the stock.
Also, over the past two years, the broader industry has clearly underperformed the market at large, as you can see below:
.jpg)
Hence, value investors might want to wait for analyst sentiments, past industry performance, Zacks rank and industry rank to turn around in the name first, but once that happens, the stock is going to be a compelling pick.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
See 5 Stocks Set to Double>>
Image: Bigstock
Should Value Investors Pick Navistar International (NAV)?
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 Navistar International Corporation 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, Navistar International has a trailing twelve months PE ratio of 5.58, as you can see in the chart below:
This level actually compares favorably with the market at large, as the PE for the S&P 500 stands at about 20.19. However, if we focus on the long-term PE trend, Navistar International’s current PE level puts it way above its midpoint of -6.49 over the past five years.
The stock’s PE also compares favorably with the Auto Tires Trucks Market’s trailing twelve months PE ratio, which stands at 12.27. This indicates that the stock is undervalued right now, compared to its peers.
Meanwhile Navistar International has a forward PE ratio (price relative to this year’s earnings) of 15.63, which is much higher than the current level. So, so it is fair to expect an increase in the share price in the near term.
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, Navistar International has a P/S ratio of just 0.32. This is quite lower than the S&P 500 average, which comes in at 3.49x right now. Also, as we can see in the chart below, this is much below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Navistar International currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Navistar International a solid choice for value investors.
What About the Stock Overall?
Though Navistar International 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 of A and a Momentum Score of F. This gives NAV 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 downbeat. While the current-year estimate has seen no upward and four downward movements, the next-year estimate has seen one upward and three downward movements over the past two months.
This has had a negative effect on the consensus estimate. While the current-year consensus has plunged 25% over the past two months, the next-year estimate has dropped 10.6%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Navistar International Corporation Price and Consensus
Navistar International Corporation price-consensus-chart | Navistar International Corporation Quote
Despite such bearish analyst sentiments, the stock has a Zacks Rank #3 (Hold) and it is the reason why we are looking for in line performance from the company in the near term.
Bottom Line
Navistar International is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Besides a sluggish industry rank (among Bottom 28% of more than 250 industries), with a Zacks Rank #3, it is hard to get too excited about the stock.
Also, over the past two years, the broader industry has clearly underperformed the market at large, as you can see below:
Hence, value investors might want to wait for analyst sentiments, past industry performance, Zacks rank and industry rank to turn around in the name first, but once that happens, the stock is going to be a compelling pick.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
See 5 Stocks Set to Double>>