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GPI vs. CRMT: Which Stock Should Value Investors Buy Now?

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Zacks Equity Research
·2 min read
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Investors with an interest in Automotive - Retail and Whole Sales stocks have likely encountered both Group 1 Automotive (GPI) and America's Car-Mart (CRMT). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Both Group 1 Automotive and America's Car-Mart have a Zacks Rank of # 1 (Strong Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

GPI currently has a forward P/E ratio of 6.82, while CRMT has a forward P/E of 10.13. We also note that GPI has a PEG ratio of 0.86. 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. CRMT currently has a PEG ratio of 0.99.

Another notable valuation metric for GPI is its P/B ratio of 1.69. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, CRMT has a P/B of 2.10.

Based on these metrics and many more, GPI holds a Value grade of A, while CRMT has a Value grade of C.

Both GPI and CRMT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GPI is the superior value option right now.


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Group 1 Automotive, Inc. (GPI) : Free Stock Analysis Report
 
Americas CarMart, Inc. (CRMT) : Free Stock Analysis Report
 
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Zacks Investment Research