Automotive stocks have started to recover after a lengthy pullback.
Analyst estimates have been moving lower in recent weeks, but the pace of this decline was modest.
Ford and General Motors are trading at roughly 6 forward P/E, which could attract value-oriented investors.
Several automotive stocks have managed to find support in May and are trying to gain upside momentum as traders and investors are attracted by their cheap valuation levels.
Ford stock had a tough year as it has found itself under pressure in mid-January after touching multi-year highs. At this point, the stock is down by almost 50% from these highs.
Analyst estimates have been moving lower in recent months, but their decline was not as dramatic as the decline in Ford’s stock price. Currently, the company is expected to report earnings of $1.93 per share in 2022 and $2.16 per share in 2023, so the stock is trading at just 6 forward P/E.
While the markets are worried about the health of the economy in the second half of this year, Ford stock is trading at attractive valuation levels and could attract speculative traders who are willing to bet that concerns are overblown.
The situation is similar in General Motors‘ case. Analyst estimates have moved lower in recent weeks, and the company is expected to report earnings of $6.73 per share in the next year.
Just like Ford, the stock is trading at roughly 6 forward P/E, so the market remains sceptical about the potential performance of legacy automakers.
However, it remains to be seen whether General Motors stock will continue to trade at such levels in case earnings estimates stabilize. In addition, traders who are worried about rising interest rates could provide additional support to low-PE stocks like General Motors.
To keep up with the latest earnings updates, visit our earnings calendar.
This article was originally posted on FX Empire