Are Investors Undervaluing Continental (CTTAY) 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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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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.
Continental (CTTAY) is a stock many investors are watching right now. CTTAY is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 9.63 right now. For comparison, its industry sports an average P/E of 19.79. Over the last 12 months, CTTAY's Forward P/E has been as high as 10 and as low as 6.21, with a median of 7.27.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CTTAY has a P/S ratio of 0.47. This compares to its industry's average P/S of 0.6.
Another great Automotive - Original Equipment stock you could consider is Miller Industries (MLR), which is a # 2 (Buy) stock with a Value Score of A.
Miller Industries sports a P/B ratio of 1.28 as well; this compares to its industry's price-to-book ratio of 3.37. In the past 52 weeks, MLR's P/B has been as high as 2.23, as low as 1.10, with a median of 1.82.
Value investors will likely look at more than just these metrics, but the above data helps show that Continental and Miller Industries are likely undervalued currently. And when considering the strength of its earnings outlook, CTTAY and MLR sticks out as one of the market's strongest value stocks.
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