Is Nissan Motor (NSANY) a Great Stock for Value Investors?

Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?

One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Nissan Motor Co., Ltd. NSANY stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:

PE Ratio

A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.

On this front, Nissan Motor has a trailing twelve months PE ratio of 6.2, as you can see in the chart below:

This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.4. If we focus on the long-term PE trend, Nissan Motor’s current PE level puts it below its midpoint over the past five years. Moreover, the current level is fairly below the highs for this stock, suggesting it might be a good entry point.

Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at 9.3. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.

We should also point out that Nissan Motor has a forward PE ratio (price relative to this year’s earnings) of 6.1, which is roughly in line with the current level. Hence the forward earnings estimates are already incorporated in the company’s current share price.

P/S Ratio

Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.

Right now, Nissan Motor has a P/S ratio of about 0.4. This is significantly lower than the S&P 500 average, which comes in at 3.3 right now. As we can see in the chart below, this is almost in line with the highs for this stock in particular over the past few years, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.

Broad Value Outlook

In aggregate, Nissan Motor currently has a Zacks Value Style Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Nissan Motor a solid choice for value investors, and some of its other key metrics make this pretty clear too.

For example, its P/CF ratio (another great indicator of value) comes in at 3.4, which is better than the industry average of 5.4. Clearly, NSANY is a solid choice on the value front from multiple angles.

What About the Stock Overall?

Though Nissan Motor might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of B and a Momentum score of A. This gives NSANY a Zacks VGM score—or its overarching fundamental grade—of A. (You can read more about the Zacks Style Scores here >>)

Meanwhile, the company’s recent earnings estimates have been trending higher. The current fiscal year as well as the next year has seen two estimates go higher in the past sixty days compared to none lower.

As a result, the current fiscal year consensus estimate has risen by 39.2% in the past two months, while the next fiscal year estimate has increased 2.3%. You can see the consensus estimate trend and recent price action for the stock in the chart below:

Nissan Motor Co. Price and Consensus
 

Nissan Motor Co. Price and Consensus | Nissan Motor Co. Quote

This favorable trend is why the stock has a Zacks Rank #2 (Buy) and why we are looking for better performance from the company in the near term.

Bottom Line

Nissan Motor is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. With a formidable industry rank (among the Top 8%) and strong Zacks Rank, Nissan Motor looks like a strong value contender. In fact, over the past one year, the industry has clearly outperformed the broader market, as you can see below:

So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.

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