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Should Value Investors Buy These Retail-Wholesale Stocks?
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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
AutoNation (AN - Free Report) is a stock many investors are watching right now. AN is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 6.25. This compares to its industry's average Forward P/E of 6.26. Over the past 52 weeks, AN's Forward P/E has been as high as 29.04 and as low as 5.86, with a median of 9.27.
Investors should also note that AN holds a PEG ratio of 0.27. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AN's PEG compares to its industry's average PEG of 0.32. Over the last 12 months, AN's PEG has been as high as 1.28 and as low as 0.25, with a median of 0.47.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AN has a P/S ratio of 0.27. This compares to its industry's average P/S of 0.41.
Finally, investors will want to recognize that AN has a P/CF ratio of 4.61. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 6.32. Over the past 52 weeks, AN's P/CF has been as high as 9.20 and as low as 4.35, with a median of 7.30.
Sonic Automotive (SAH - Free Report) may be another strong Automotive - Retail and Whole Sales stock to add to your shortlist. SAH is a # 1 (Strong Buy) stock with a Value grade of A.
Additionally, Sonic Automotive has a P/B ratio of 2.14 while its industry's price-to-book ratio sits at 2.39. For SAH, this valuation metric has been as high as 2.83, as low as 1.81, with a median of 2.21 over the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that AutoNation and Sonic Automotive are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AN and SAH feels like a great value stock at the moment.
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Should Value Investors Buy These Retail-Wholesale Stocks?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
AutoNation (AN - Free Report) is a stock many investors are watching right now. AN is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 6.25. This compares to its industry's average Forward P/E of 6.26. Over the past 52 weeks, AN's Forward P/E has been as high as 29.04 and as low as 5.86, with a median of 9.27.
Investors should also note that AN holds a PEG ratio of 0.27. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AN's PEG compares to its industry's average PEG of 0.32. Over the last 12 months, AN's PEG has been as high as 1.28 and as low as 0.25, with a median of 0.47.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AN has a P/S ratio of 0.27. This compares to its industry's average P/S of 0.41.
Finally, investors will want to recognize that AN has a P/CF ratio of 4.61. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 6.32. Over the past 52 weeks, AN's P/CF has been as high as 9.20 and as low as 4.35, with a median of 7.30.
Sonic Automotive (SAH - Free Report) may be another strong Automotive - Retail and Whole Sales stock to add to your shortlist. SAH is a # 1 (Strong Buy) stock with a Value grade of A.
Additionally, Sonic Automotive has a P/B ratio of 2.14 while its industry's price-to-book ratio sits at 2.39. For SAH, this valuation metric has been as high as 2.83, as low as 1.81, with a median of 2.21 over the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that AutoNation and Sonic Automotive are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AN and SAH feels like a great value stock at the moment.