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Should Value Investors Buy Volvo (VLVLY) Stock?

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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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 stock to keep an eye on is Volvo (VLVLY - Free Report) . VLVLY is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock holds a P/E ratio of 9.11, while its industry has an average P/E of 26.27. Over the past 52 weeks, VLVLY's Forward P/E has been as high as 12.77 and as low as 9.11, with a median of 10.66.

We also note that VLVLY holds a PEG ratio of 0.54. 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. VLVLY's industry currently sports an average PEG of 0.88. VLVLY's PEG has been as high as 0.78 and as low as 0.54, with a median of 0.66, all within the past year.

Finally, our model also underscores that VLVLY has a P/CF ratio of 8.04. 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. VLVLY's current P/CF looks attractive when compared to its industry's average P/CF of 28.71. Over the past year, VLVLY's P/CF has been as high as 8.54 and as low as 6.31, with a median of 7.26.

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


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