Are Investors Undervaluing Fiat Chrysler (FCAU) Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 stock to keep an eye on is Fiat Chrysler (FCAU). FCAU is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 4.77, which compares to its industry's average of 7.97. Over the past 52 weeks, FCAU's Forward P/E has been as high as 6 and as low as 3.99, with a median of 5.03.
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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. FCAU has a P/S ratio of 0.21. This compares to its industry's average P/S of 0.33.
Finally, we should also recognize that FCAU has a P/CF ratio of 2.22. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 4.22. Over the past 52 weeks, FCAU's P/CF has been as high as 2.89 and as low as 2, with a median of 2.42.
These are just a handful of the figures considered in Fiat Chrysler's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that FCAU is an impressive value stock right now.
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