Yahoo Finance Are Investors Undervaluing BorgWarner (BWA) Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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.
BorgWarner (BWA) is a stock many investors are watching right now. BWA is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 7.20, while its industry has an average P/E of 13.71. Over the last 12 months, BWA's Forward P/E has been as high as 10.16 and as low as 7.20, with a median of 8.33.
Another valuation metric that we should highlight is BWA's P/B ratio of 1.18. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.81. Over the past year, BWA's P/B has been as high as 1.56 and as low as 1.14, with a median of 1.29.
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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. BWA has a P/S ratio of 0.47. This compares to its industry's average P/S of 0.69.
Finally, investors should note that BWA has a P/CF ratio of 6.15. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. BWA's P/CF compares to its industry's average P/CF of 23.43. Within the past 12 months, BWA's P/CF has been as high as 7.40 and as low as 5.52, with a median of 6.36.
Another great Automotive - Original Equipment stock you could consider is Volvo (VLVLY), which is a # 2 (Buy) stock with a Value Score of A.
Volvo is trading at a forward earnings multiple of 10.28 at the moment, with a PEG ratio of 0.62. This compares to its industry's average P/E of 13.71 and average PEG ratio of 0.73.
Over the past year, VLVLY's P/E has been as high as 13.47, as low as 8.95, with a median of 10.83; its PEG ratio has been as high as 0.81, as low as 0.54, with a median of 0.85 during the same time period.
Volvo sports a P/B ratio of 3.29 as well; this compares to its industry's price-to-book ratio of 1.81. In the past 52 weeks, VLVLY's P/B has been as high as 3.58, as low as 2.41, with a median of 2.93.
Value investors will likely look at more than just these metrics, but the above data helps show that BorgWarner and Volvo are likely undervalued currently. And when considering the strength of its earnings outlook, BWA and VLVLY sticks out as one of the market's strongest value stocks.
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BorgWarner Inc. (BWA) : Free Stock Analysis Report
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