Is Magna International (MGA) 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 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.

Magna International (MGA) is a stock many investors are watching right now. MGA is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 8.47 right now. For comparison, its industry sports an average P/E of 18.93. Over the past 52 weeks, MGA's Forward P/E has been as high as 8.47 and as low as 5.65, with a median of 6.79.

We also note that MGA holds a PEG ratio of 0.94. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. MGA's industry has an average PEG of 0.98 right now. Within the past year, MGA's PEG has been as high as 0.94 and as low as 0.46, with a median of 0.60.

Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by 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 0.42. This compares to its industry's average P/S of 0.72.

Value investors will likely look at more than just these metrics, but the above data helps show that Magna International is likely undervalued currently. And when considering the strength of its earnings outlook, MGA sticks out as one of the market's strongest value stocks.

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

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