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Should Value Investors Buy General Motors (GM) Stock?
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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 latest value, growth, and momentum trends to underscore strong picks.
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.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is General Motors (GM - Free Report) . GM is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 6.34, which compares to its industry's average of 10.80. Over the past 52 weeks, GM's Forward P/E has been as high as 7.65 and as low as 5.33, with a median of 6.30.
Investors should also note that GM holds a PEG ratio of 0.75. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. GM's industry has an average PEG of 1.47 right now. Over the past 52 weeks, GM's PEG has been as high as 1.28 and as low as 0.65, with a median of 0.77.
Another valuation metric that we should highlight is GM's P/B ratio of 1.25. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. GM's current P/B looks attractive when compared to its industry's average P/B of 2.54. Over the past year, GM's P/B has been as high as 1.78 and as low as 1.05, with a median of 1.44.
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. GM has a P/S ratio of 0.35. This compares to its industry's average P/S of 0.71.
Finally, investors should note that GM has a P/CF ratio of 3.70. 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 6.64. Over the past 52 weeks, GM's P/CF has been as high as 8.51 and as low as 3.12, with a median of 6.51.
Value investors will likely look at more than just these metrics, but the above data helps show that General Motors is likely undervalued currently. And when considering the strength of its earnings outlook, GM sticks out at as one of the market's strongest value stocks.
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Should Value Investors Buy General Motors (GM) 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 latest value, growth, and momentum trends to underscore strong picks.
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.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is General Motors (GM - Free Report) . GM is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 6.34, which compares to its industry's average of 10.80. Over the past 52 weeks, GM's Forward P/E has been as high as 7.65 and as low as 5.33, with a median of 6.30.
Investors should also note that GM holds a PEG ratio of 0.75. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. GM's industry has an average PEG of 1.47 right now. Over the past 52 weeks, GM's PEG has been as high as 1.28 and as low as 0.65, with a median of 0.77.
Another valuation metric that we should highlight is GM's P/B ratio of 1.25. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. GM's current P/B looks attractive when compared to its industry's average P/B of 2.54. Over the past year, GM's P/B has been as high as 1.78 and as low as 1.05, with a median of 1.44.
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. GM has a P/S ratio of 0.35. This compares to its industry's average P/S of 0.71.
Finally, investors should note that GM has a P/CF ratio of 3.70. 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 6.64. Over the past 52 weeks, GM's P/CF has been as high as 8.51 and as low as 3.12, with a median of 6.51.
Value investors will likely look at more than just these metrics, but the above data helps show that General Motors is likely undervalued currently. And when considering the strength of its earnings outlook, GM sticks out at as one of the market's strongest value stocks.