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

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Zacks Equity Research
·2 min read
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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. 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.

Asbury Automotive Group (ABG) is a stock many investors are watching right now. ABG is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 8.68, which compares to its industry's average of 11.08. Over the past 52 weeks, ABG's Forward P/E has been as high as 12.94 and as low as 4.06, with a median of 9.80.

We also note that ABG holds a PEG ratio of 0.67. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ABG's industry has an average PEG of 1.87 right now. Over the last 12 months, ABG's PEG has been as high as 1.21 and as low as 0.22, with a median of 0.64.

Finally, we should also recognize that ABG has a P/CF ratio of 9.11. 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. This stock's P/CF looks attractive against its industry's average P/CF of 11.41. Over the past year, ABG's P/CF has been as high as 9.87 and as low as 3.53, with a median of 7.98.

Value investors will likely look at more than just these metrics, but the above data helps show that Asbury Automotive Group is likely undervalued currently. And when considering the strength of its earnings outlook, ABG sticks out at as one of the market's strongest value stocks.


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