Are Investors Undervaluing Penske Automotive Group (PAG) Right Now?
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
Penske Automotive Group (PAG) is a stock many investors are watching right now. PAG is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A.
Another notable valuation metric for PAG is its P/B ratio of 1.95. The P/B ratio is used to compare a stock's market value with 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 2.05. Over the past year, PAG's P/B has been as high as 2.31 and as low as 1.61, with a median of 1.97.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. PAG has a P/S ratio of 0.3. This compares to its industry's average P/S of 0.33.
Investors could also keep in mind Titan Machinery (TITN), an Automotive - Retail and Whole Sales stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Additionally, Titan Machinery has a P/B ratio of 1.14 while its industry's price-to-book ratio sits at 2.05. For TITN, this valuation metric has been as high as 2.09, as low as 1.12, with a median of 1.59 over the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Penske Automotive Group and Titan Machinery are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, PAG and TITN feels like a great value stock at the moment.
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Penske Automotive Group, Inc. (PAG) : Free Stock Analysis Report
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