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Is AutoNation (AN) a Great Value Stock Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is AutoNation (AN). AN is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A.

AN is also sporting a PEG ratio of 0.47. 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 industry has an average PEG of 0.61 right now. Over the past 52 weeks, AN's PEG has been as high as 4.19 and as low as 0.45, with a median of 1.09.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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 0.35. This compares to its industry's average P/S of 0.43.

Finally, investors will want to recognize that AN has a P/CF ratio of 7.94. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 10.10. Over the past 52 weeks, AN's P/CF has been as high as 9.20 and as low as 5.19, with a median of 7.10.

These figures are just a handful of the metrics value investors tend to look at, but they help show that AutoNation is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AN feels like a great value stock at the moment.


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