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Are Investors Undervaluing Asbury Automotive Group (ABG) Right Now?

Zacks Equity Research
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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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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.

Asbury Automotive Group (ABG) is a stock many investors are watching right now. ABG is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 8.57. This compares to its industry's average Forward P/E of 8.92. Over the past 52 weeks, ABG's Forward P/E has been as high as 9.78 and as low as 7.37, with a median of 8.41.

Investors should also note that ABG holds a PEG ratio of 0.60. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ABG's industry has an average PEG of 1.46 right now. Over the last 12 months, ABG's PEG has been as high as 1.09 and as low as 0.47, with a median of 0.61.

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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. ABG has a P/S ratio of 0.22. This compares to its industry's average P/S of 0.23.

Finally, we should also recognize that ABG has a P/CF ratio of 6.70. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. ABG's P/CF compares to its industry's average P/CF of 6.73. ABG's P/CF has been as high as 7.89 and as low as 5.31, with a median of 6.31, all within the past year.

These are only a few of the key metrics included in Asbury Automotive Group'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, ABG looks like an impressive value stock at the moment.


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