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 Heavy Machinery & Vehicles 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 Heavy Machinery & Vehicles 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.

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3 Undervalued Heavy Machinery & Vehicles 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 Heavy Machinery & Vehicles industry for Monday, September 09, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Heavy Machinery & Vehicles 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.

Komatsu Ltd (ADR)’s Value Grade

Value Grade:

KOMATSU LTD. is a Japan-based company principally engaged in the research, development, sale, sales finance of products such as construction machinery. The Company operates in three business segments. Construction Machinery & Vehicle segment provides drilling machinery, loading machinery, land preparation and roadbed machinery, transport machinery, forestry machinery, underground construction machinery, underground mining machinery, environmental recycling machinery, industrial vehicles, cast products and logistics services. Retail Finance segment is engaged in the sales finance business related to construction and mining equipment. Industrial Machinery & Others segment provides forging machines, sheet metal machines, machine tools, temperature control devices, as well as defense-related ammunition and armored vehicles, among others. The Company also provides excimer lasers for other semiconductor exposure equipment.

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.

Komatsu Ltd (ADR) has a Value Score of 69, which is considered to be undervalued.

When you look at Komatsu Ltd (ADR)’s price-to-sales ratio at 0.88 compared to the industry median at 0.78, this company has a higher price relative to revenue compared to its peers. This could make Komatsu Ltd (ADR)’s stock less attractive for value investors.

Komatsu Ltd (ADR)’s price-earnings ratio is 8.67 compared to the industry median at 13.85. This means it has a lower share price relative to earnings compared to its peers. This could make Komatsu Ltd (ADR) more attractive for value investors.

Now, let’s assess Komatsu Ltd (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 6.5, when compared to the industry median of 9.4, the company may be considered undervalued 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. Komatsu Ltd (ADR)’s shareholder yield is higher than its industry median ratio of 1.00%. 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. Komatsu Ltd (ADR)’s price-to-book ratio is lower than its industry median ratio of 1.68. This could make Komatsu Ltd (ADR) more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Komatsu Ltd (ADR)’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Komatsu Ltd (ADR)’s price-to-free-cash-flow ratio is higher than its industry median ratio of 20.62. This could make Komatsu Ltd (ADR) less attractive because the higher P/FCF ratio indicates that Komatsu Ltd (ADR) is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Oshkosh Corp’s Value Grade

Value Grade:

Oshkosh Corporation is an industrial company focused on the designing, development and manufacturing of purpose-built vehicles and equipment. The Company operates through three segments. Access segment designs and manufactures access and material handling equipment for use in a range of construction, industrial, agricultural and maintenance applications to position workers and materials at height under brands, JLG and SkyTrak. The segment's customer base includes equipment rental companies, construction contractors, manufacturing companies and home improvement centers. The segment also includes Jerr-Dan towing and recovery vehicles. Defense segment designs, manufactures and sustains specialty vehicles and mobility systems for the United States Department of Defense and exports tactical wheeled vehicles to approved foreign customers. Vocational segment includes the Pierce, Maxi-Metal, McNeilus, AeroTech, IMT, Frontline Communications and Oshkosh S-Series businesses.

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.

Oshkosh Corp has a Value Score of 82, which is considered to be undervalued.

Oshkosh Corp’s price-earnings ratio is 9.4 compared to the industry median at 13.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Oshkosh Corp more attractive for value investors.

Oshkosh Corp’s price-to-book ratio is higher than its peers. This could make Oshkosh Corp less attractive for value investors when compared to the industry median at 1.68.

You can read more about Oshkosh Corp’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.

Trinity Industries Inc’s Value Grade

Value Grade:

Trinity Industries, Inc. is the owner of businesses that provide rail transportation products and services in North America. The Company markets its railcar products and services under the trade name TrinityRail. The TrinityRail platform provides railcar leasing and management services; railcar manufacturing, maintenance and modifications, and other railcar logistics products and services. Its segments include the Railcar Leasing and Management Services Group and the Rail Products Group. Its Railcar Leasing and Management Services Group owns and operates a fleet of railcars and provides third-party fleet leasing, management, administrative services, and other railcar logistics products and services. Its Rail Products Group manufactures and sells railcars and related parts and components and provides railcar maintenance and modification services. It operates in various markets including refined products and chemicals, energy, agriculture, construction and metals, and consumer products.

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.

Trinity Industries Inc has a Value Score of 65, which is considered to be undervalued.

Trinity Industries Inc’s price-earnings ratio is 14.7 compared to the industry median at 13.8. This means that it has a higher price relative to its earnings compared to its peers. This makes Trinity Industries Inc less attractive for value investors.

Trinity Industries Inc’s price-to-book ratio is lower than its peers. This could make Trinity Industries Inc more attractive for value investors when compared to the industry median at 1.68.

You can read more about Trinity Industries Inc’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 Heavy Machinery & Vehicles 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 Heavy Machinery & Vehicles stocks as well as other industrys.

Choosing Which of the 3 Best Heavy Machinery & Vehicles 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.

• Komatsu Ltd (ADR) stock has a Value Grade of B.
• Oshkosh Corp stock has a Value Grade of A.
• Trinity Industries Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 3 undervalued stocks in the Heavy Machinery & Vehicles 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 Heavy Machinery & Vehicles Stocks

Want to learn more about Heavy Machinery & Vehicles 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 Heavy Machinery & Vehicles Stocks for Monday, September 09
• 3 Undervalued Heavy Machinery & Vehicles Stocks for Friday, September 06
• Why Blue Bird Corp’s (BLBD) Stock Is Down 4.98%
• Why Trinity Industries Inc’s (TRN) Stock Is Down 4.23%

AAII Disclaimer

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