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, 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.
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 company value investors might notice is BorgWarner (BWA). BWA is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 7.83. This compares to its industry’s average Forward P/E of 14.51. Over the past year, BWA’s Forward P/E has been as high as 10.16 and as low as 7.25, with a median of 8.49.
Another valuation metric that we should highlight is BWA’s P/B ratio of 1.27. 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 attractive against its industry’s average P/B of 1.80. Over the past 12 months, BWA’s P/B has been as high as 1.56 and as low as 1.14, with a median of 1.30.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. BWA has a P/S ratio of 0.48. This compares to its industry’s average P/S of 0.69.
Finally, investors should note that BWA has a P/CF ratio of 6.62. 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 23.48. Over the past 52 weeks, BWA’s P/CF has been as high as 7.40 and as low as 5.52, with a median of 6.39.
These are only a few of the key metrics included in BorgWarner’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, BWA looks like an impressive value stock at the moment.
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BorgWarner Inc. (BWA) : Free Stock Analysis Report