Is Goodyear (GT) Stock Undervalued Right Now?
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.
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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 Goodyear (GT). GT is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 8.15, while its industry has an average P/E of 8.87. Over the last 12 months, GT's Forward P/E has been as high as 8.86 and as low as 5.64, with a median of 7.16.
We should also highlight that GT has a P/B ratio of 0.76. 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. GT's current P/B looks attractive when compared to its industry's average P/B of 0.86. Over the past year, GT's P/B has been as high as 1.11 and as low as 0.50, with a median of 0.82.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. GT has a P/S ratio of 0.26. This compares to its industry's average P/S of 0.41.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Goodyear is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, GT feels like a great value stock at the moment.
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