Should Value Investors Buy Volkswagen AG (VWAGY) Stock?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Neverthe…

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August 27, 2021 3 min read

This story originally appeared on Zacks

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the “Value” category. Stocks with high Zacks Ranks and “A” grades for Value will be some of the highest-quality value stocks on the market today.

Volkswagen AG (VWAGY) is a stock many investors are watching right now. VWAGY is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 9.03, while its industry has an average P/E of 11.56. Over the past 52 weeks, VWAGY’s Forward P/E has been as high as 14.65 and as low as 7.11, with a median of 9.08.

Finally, our model also underscores that VWAGY has a P/CF ratio of 3.15. 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. This company’s current P/CF looks solid when compared to its industry’s average P/CF of 6.59. Over the past year, VWAGY’s P/CF has been as high as 5.30 and as low as 2.25, with a median of 2.98.

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

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