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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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.
One company to watch right now is AutoNation (AN - Free Report) . AN is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock holds a P/E ratio of 5.16, while its industry has an average P/E of 5.55. Over the last 12 months, AN's Forward P/E has been as high as 29.04 and as low as 4.99, with a median of 8.14.
Investors will also notice that AN has a PEG ratio of 0.22. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. AN's PEG compares to its industry's average PEG of 0.46. Within the past year, AN's PEG has been as high as 1.23 and as low as 0.21, with a median of 0.42.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. AN has a P/S ratio of 0.24. This compares to its industry's average P/S of 0.37.
Finally, we should also recognize that AN has a P/CF ratio of 4.26. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. AN's P/CF compares to its industry's average P/CF of 5.96. Over the past year, AN's P/CF has been as high as 8.86 and as low as 4.11, with a median of 6.67.
Penske Automotive Group (PAG - Free Report) may be another strong Automotive - Retail and Whole Sales stock to add to your shortlist. PAG is a # 2 (Buy) stock with a Value grade of A.
Shares of Penske Automotive Group currently holds a Forward P/E ratio of 6.63, and its PEG ratio is 3.42. In comparison, its industry sports average P/E and PEG ratios of 5.55 and 0.46.
Over the last 12 months, PAG's P/E has been as high as 11.62, as low as 6.33, with a median of 8.11, and its PEG ratio has been as high as 3.42, as low as 0.31, with a median of 0.60.
Penske Automotive Group sports a P/B ratio of 1.81 as well; this compares to its industry's price-to-book ratio of 2.01. In the past 52 weeks, PAG's P/B has been as high as 2.31, as low as 1.61, with a median of 1.97.
These figures are just a handful of the metrics value investors tend to look at, but they help show that AutoNation and Penske Automotive Group are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AN and PAG feels like a great value stock at the moment.
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Is AutoNation (AN) Stock Undervalued Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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.
One company to watch right now is AutoNation (AN - Free Report) . AN is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock holds a P/E ratio of 5.16, while its industry has an average P/E of 5.55. Over the last 12 months, AN's Forward P/E has been as high as 29.04 and as low as 4.99, with a median of 8.14.
Investors will also notice that AN has a PEG ratio of 0.22. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. AN's PEG compares to its industry's average PEG of 0.46. Within the past year, AN's PEG has been as high as 1.23 and as low as 0.21, with a median of 0.42.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. AN has a P/S ratio of 0.24. This compares to its industry's average P/S of 0.37.
Finally, we should also recognize that AN has a P/CF ratio of 4.26. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. AN's P/CF compares to its industry's average P/CF of 5.96. Over the past year, AN's P/CF has been as high as 8.86 and as low as 4.11, with a median of 6.67.
Penske Automotive Group (PAG - Free Report) may be another strong Automotive - Retail and Whole Sales stock to add to your shortlist. PAG is a # 2 (Buy) stock with a Value grade of A.
Shares of Penske Automotive Group currently holds a Forward P/E ratio of 6.63, and its PEG ratio is 3.42. In comparison, its industry sports average P/E and PEG ratios of 5.55 and 0.46.
Over the last 12 months, PAG's P/E has been as high as 11.62, as low as 6.33, with a median of 8.11, and its PEG ratio has been as high as 3.42, as low as 0.31, with a median of 0.60.
Penske Automotive Group sports a P/B ratio of 1.81 as well; this compares to its industry's price-to-book ratio of 2.01. In the past 52 weeks, PAG's P/B has been as high as 2.31, as low as 1.61, with a median of 1.97.
These figures are just a handful of the metrics value investors tend to look at, but they help show that AutoNation and Penske Automotive Group are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AN and PAG feels like a great value stock at the moment.