Are Investors Undervaluing Magna International (MGA) Right Now?

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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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.

One company to watch right now is Magna International (MGA). MGA is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 8.47, which compares to its industry's average of 16.36. MGA's Forward P/E has been as high as 8.47 and as low as 5.65, with a median of 6.79, all within the past year.

Investors should also recognize that MGA has a P/B ratio of 1.03. 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. This stock's P/B looks solid versus its industry's average P/B of 2.58. MGA's P/B has been as high as 1.05 and as low as 0.71, with a median of 0.93, over the past year.

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. MGA has a P/S ratio of 0.39. This compares to its industry's average P/S of 0.68.

These are only a few of the key metrics included in Magna International'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, MGA looks like an impressive value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

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