Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Auto & Truck Manufacturers industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Auto & Truck Manufacturers Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

Click the button below to learn more about A+ Investor and subscribe today.

3 Undervalued Auto & Truck Manufacturers Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Auto & Truck Manufacturers industry for Wednesday, May 22, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Auto & Truck Manufacturers industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Hino Motors Ltd (ADR)’s Value Grade

Value Grade:

HINO MOTORS, LTD. is a Japan-based company mainly engaged in the manufacture and sale of trucks and buses, and the provision of related services. The Company operates in two regional segments. The Company is mainly engaged in the manufacture and sale of various trucks, sightseeing buses, route buses, industrial diesel engines and other products, the manufacture of machined parts, forged parts, dies, electrical components and other products, the assembly of automobiles and unit parts, as well as the sale of automobiles. The Company operates within the domestic market and to overseas markets, including Asia, North America, Oceania and others.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Hino Motors Ltd (ADR) has a Value Score of 72, which is considered to be undervalued.

When you look at Hino Motors Ltd (ADR)’s price-to-sales ratio at 0.20 compared to the industry median at 1.18, this company has a lower price relative to revenue compared to its peers. This could make Hino Motors Ltd (ADR)’s stock more attractive for value investors.

Hino Motors Ltd (ADR)’s price-earnings ratio is 17.50 compared to the industry median at 10.94. This means it has a higher share price relative to earnings compared to its peers. This could make Hino Motors Ltd (ADR) less attractive for value investors.

Now, let’s assess Hino Motors Ltd (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 13.9, when compared to the industry median of 12.4, the company may be considered overvalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Hino Motors Ltd (ADR)’s shareholder yield is higher than its industry median ratio of (3.67%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Hino Motors Ltd (ADR)’s price-to-book ratio is lower than its industry median ratio of 0.88. This could make Hino Motors Ltd (ADR) more attractive to investors looking for a new addition to their portfolio.

Mercedes-Benz Group AG’s Value Grade

Value Grade:

Mercedes-Benz Group AG, formerly Daimler AG (Daimler), is a Germany-based automotive engineering company. The Company engages in the development, production and distribution of cars and vans in Germany, and the management of the Daimler Group. The segments include Mercedes-Benz Cars, Mercedes-Benz Vans and Daimler Financial Services. The Mercedes-Benz Cars segment includes vehicles of the Mercedes-Benz brand, including the brands, Mercedes-AMG and Mercedes-Maybach, and small cars under the smart brand, as well as the Mercedes me brand. The Mercedes-Benz Vans sells vans under the brand name Mercedes-Benz and the Freightliner brand. The Daimler Mobility AG offers e.g. financing, leasing, car subscription and car rental, fleet management, digital services, as well as mobility services. The Daimler financial services also supports the sales of its automotive brands worldwide.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Mercedes-Benz Group AG has a Value Score of 98, which is considered to be undervalued.

Mercedes-Benz Group AG’s price-earnings ratio is 5.3 compared to the industry median at 10.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Mercedes-Benz Group AG more attractive for value investors.

Mercedes-Benz Group AG’s price-to-book ratio is higher than its peers. This could make Mercedes-Benz Group AG less attractive for value investors when compared to the industry median at 0.88.

You can read more about Mercedes-Benz Group AG’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Toyota Motor Corp (ADR)’s Value Grade

Value Grade:

Toyota Motor Corp is a Japan-based company engaged in the automobile business, finance business and other businesses. The Company operates in three business segments. The Automobile segment is engaged in the design, manufacture and sale of sedans, minivans, 2box, sports utility vehicles, trucks and related vehicles, as well as related parts and products. The Finance segment is engaged in finance and vehicle leasing business. The Other segment is engaged in the design, manufacture and sale of houses, as well as conduct information communication business. The Company is also engaged in the control of manufacturing and sales companies, as well as public relations and research activities business in North American and Europe. The Company also provides robots, basic research projects, marine and agribio business. The Company also provides electric vehicles and vehicles equipped with the new function Advanced Drive of driving support technology, driver assistance or connected cars services.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Toyota Motor Corp (ADR) has a Value Score of 64, which is considered to be undervalued.

Toyota Motor Corp (ADR)’s price-earnings ratio is 9.4 compared to the industry median at 10.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Toyota Motor Corp (ADR) more attractive for value investors.

Toyota Motor Corp (ADR)’s price-to-book ratio is lower than its peers. This could make Toyota Motor Corp (ADR) more attractive for value investors when compared to the industry median at 0.88.

You can read more about Toyota Motor Corp (ADR)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Auto & Truck Manufacturers Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Auto & Truck Manufacturers stocks as well as other industrys.

Choosing Which of the 3 Best Auto & Truck Manufacturers Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Hino Motors Ltd (ADR) stock has a Value Grade of B.
• Mercedes-Benz Group AG stock has a Value Grade of A.
• Toyota Motor Corp (ADR) stock has a Value Grade of B.

Now that you have a bit more background about each of the 3 undervalued stocks in the Auto & Truck Manufacturers industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Auto & Truck Manufacturers Stocks

Want to learn more about Auto & Truck Manufacturers stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Auto & Truck Manufacturers Stocks for Wednesday, May 22
• What You Need to Know About Xpeng Inc - ADR's Q1 Earnings
• Why Lotus Technology Inc - ADR’s (LOT) Stock Is Up 7.73%
• Why Tesla Inc’s (TSLA) Stock Is Up 6.66%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.