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Are Investors Undervaluing Aaron's (AAN) Right Now?

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·3 min read
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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.

Aaron's (AAN) is a stock many investors are watching right now. AAN is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 13.81, while its industry has an average P/E of 20.87. Over the last 12 months, AAN's Forward P/E has been as high as 17.65 and as low as 3.78, with a median of 13.13.

Investors should also note that AAN holds a PEG ratio of 0.93. 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. AAN's PEG compares to its industry's average PEG of 2.34. Within the past year, AAN's PEG has been as high as 1.67 and as low as 0.28, with a median of 0.85.

Another valuation metric that we should highlight is AAN's P/B ratio of 2.53. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 6.19. AAN's P/B has been as high as 2.81 and as low as 0.58, with a median of 2.10, over the past year.

Finally, investors should note that AAN has a P/CF ratio of 1.97. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 6.82. Over the past year, AAN's P/CF has been as high as 2.43 and as low as 0.48, with a median of 1.79.

These are only a few of the key metrics included in Aaron's's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, AAN looks like an impressive value stock at the moment.


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