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

Zacks Equity Research
·3 min read

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. 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 value investors might notice is Aaron's (AAN). AAN is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 13.14, which compares to its industry's average of 20.43. Over the past 52 weeks, AAN's Forward P/E has been as high as 17.65 and as low as 3.78, with a median of 13.12.

AAN is also sporting a PEG ratio of 0.89. 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. AAN's PEG compares to its industry's average PEG of 2.29. Over the past 52 weeks, 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 2.51. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 6.19. Over the past year, AAN's P/B has been as high as 2.81 and as low as 0.58, with a median of 2.10.

Finally, we should also recognize that AAN has a P/CF ratio of 1.96. 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. This company's current P/CF looks solid when compared to 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 just a handful of the figures considered in Aaron's's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that AAN is an impressive value stock right now.


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