Is Lear (LEA) Stock Undervalued 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 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 company to watch right now is Lear (LEA). LEA is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 7.87. This compares to its industry's average Forward P/E of 18.22. LEA's Forward P/E has been as high as 8.32 and as low as 5.65, with a median of 7.13, all within the past year.

Investors should also note that LEA holds a PEG ratio of 0.75. 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. LEA's PEG compares to its industry's average PEG of 0.94. Over the last 12 months, LEA's PEG has been as high as 0.77 and as low as 0.34, with a median of 0.47.

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 preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. LEA has a P/S ratio of 0.3. This compares to its industry's average P/S of 0.71.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Lear is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, LEA feels like a great value stock at the moment.

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

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Source Zacks-com