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Should Value Investors Standard Motor (SMP) Stock?
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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 Standard Motor Products, Inc. (SMP - Free Report) 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, Standard Motor has a trailing twelve months PE ratio of 16.8, 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 20.4. If we focus on the long-term PE trend, Standard Motor’s current PE level puts it below its midpoint over the past five years.
Further, the stock’s PE also compares favorably with its industry’s trailing twelve months PE ratio, which stands at 20.3. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Standard Motor has a forward PE ratio (price relative to this year’s earnings) of just 14.2, so it is fair to say that a slightly more value-oriented path may be ahead for the stock in the near term too.
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, Standard Motor has a P/S ratio of about 1. This is considerably lower than the S&P 500 average, which comes in at 3.3 right now.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Standard Motor currently has a Zacks Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes SMP a good choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the P/B ratio for the company is 2.4, a level that is lower than the industry average of 3.5. Additionally, its P/CF ratio (another great indicator of value) comes in at 12.1, which is better than the industry average of 14.4. Clearly, SMP is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Standard Motor 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 grade of B and a Momentum score of F. This gives SMP a Zacks VGM score—or its overarching fundamental grade—of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The next quarter has seen two upward estimate revision in the past sixty days compared to no downward, while the full year estimate has also seen one upward and none downward revisions in the same time frame.
As a result, the next quarter consensus estimate increased 6.4% in the past two months, while the full year estimate has increased by 2.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This positive trend signifies bullish analyst sentiment, and its Zacks Rank #2 (Buy) indicates robust fundamentals and expectations of outperformance in the near term.
Bottom Line
Standard Motor’s is an inspired choice for value investors, as it is hard to beat its good lineup of statistics on this front. Moreover, with a decent industry rank (top 39% out of more than 250 industries) and Zacks Rank #2 the company deserves attention right now. However, over the past one year, its industry has clearly underperformed the broader market, as you can see below:
Despite the poor past performance of the industry, a good industry rank signals that the stock is likely to benefit from favorable broader factors in the immediate future. Add to this the positive estimate revisions and robust value metrics, and we believe that we have a strong value contender in Standard Motor.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Image: Bigstock
Should Value Investors Standard Motor (SMP) Stock?
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?
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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 Standard Motor Products, Inc. (SMP - Free Report) 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, Standard Motor has a trailing twelve months PE ratio of 16.8, 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 20.4. If we focus on the long-term PE trend, Standard Motor’s current PE level puts it below its midpoint over the past five years.
Further, the stock’s PE also compares favorably with its industry’s trailing twelve months PE ratio, which stands at 20.3. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Standard Motor has a forward PE ratio (price relative to this year’s earnings) of just 14.2, so it is fair to say that a slightly more value-oriented path may be ahead for the stock in the near term too.
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, Standard Motor has a P/S ratio of about 1. This is considerably lower than the S&P 500 average, which comes in at 3.3 right now.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Standard Motor currently has a Zacks Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes SMP a good choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the P/B ratio for the company is 2.4, a level that is lower than the industry average of 3.5. Additionally, its P/CF ratio (another great indicator of value) comes in at 12.1, which is better than the industry average of 14.4. Clearly, SMP is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Standard Motor 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 grade of B and a Momentum score of F. This gives SMP a Zacks VGM score—or its overarching fundamental grade—of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The next quarter has seen two upward estimate revision in the past sixty days compared to no downward, while the full year estimate has also seen one upward and none downward revisions in the same time frame.
As a result, the next quarter consensus estimate increased 6.4% in the past two months, while the full year estimate has increased by 2.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Standard Motor Products, Inc. Price and Consensus
Standard Motor Products, Inc. Price and Consensus | Standard Motor Products, Inc. Quote
This positive trend signifies bullish analyst sentiment, and its Zacks Rank #2 (Buy) indicates robust fundamentals and expectations of outperformance in the near term.
Bottom Line
Standard Motor’s is an inspired choice for value investors, as it is hard to beat its good lineup of statistics on this front. Moreover, with a decent industry rank (top 39% out of more than 250 industries) and Zacks Rank #2 the company deserves attention right now. However, over the past one year, its industry has clearly underperformed the broader market, as you can see below:
Despite the poor past performance of the industry, a good industry rank signals that the stock is likely to benefit from favorable broader factors in the immediate future. Add to this the positive estimate revisions and robust value metrics, and we believe that we have a strong value contender in Standard Motor.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Download the new report now>>