Should Value Investors Buy Standard Motor Products (SMP) Stock?
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 proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One stock to keep an eye on is Standard Motor Products (SMP). SMP is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 11.73 right now. For comparison, its industry sports an average P/E of 14.29. SMP's Forward P/E has been as high as 16.16 and as low as 10.17, with a median of 13.30, all within the past year.
Investors should also recognize that SMP has a P/B ratio of 1.78. 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. SMP's current P/B looks attractive when compared to its industry's average P/B of 2.91. Over the past year, SMP's P/B has been as high as 2.23 and as low as 1.53, with a median of 1.75.
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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. SMP has a P/S ratio of 0.84. This compares to its industry's average P/S of 1.54.
Finally, our model also underscores that SMP has a P/CF ratio of 9.71. 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 stock's P/CF looks attractive against its industry's average P/CF of 15.80. Within the past 12 months, SMP's P/CF has been as high as 14.36 and as low as 8.08, with a median of 10.47.
Value investors will likely look at more than just these metrics, but the above data helps show that Standard Motor Products is likely undervalued currently. And when considering the strength of its earnings outlook, SMP sticks out at as one of the market's strongest value stocks.
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Standard Motor Products, Inc. (SMP): Free Stock Analysis Report
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