Are These Retail-Wholesale Stocks a Great Value Stocks Right Now?
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, 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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One stock to keep an eye on is Group 1 Automotive (GPI). GPI is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 4.88, while its industry has an average P/E of 6.25. Over the last 12 months, GPI's Forward P/E has been as high as 9.62 and as low as 4.88, with a median of 7.12.
We should also highlight that GPI has a P/B ratio of 1.57. 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 2.27. Within the past 52 weeks, GPI's P/B has been as high as 2.19 and as low as 1.54, with a median of 1.82.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. GPI has a P/S ratio of 0.23. This compares to its industry's average P/S of 0.41.
Finally, investors should note that GPI has a P/CF ratio of 4.60. 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. GPI's current P/CF looks attractive when compared to its industry's average P/CF of 9.50. Over the past 52 weeks, GPI's P/CF has been as high as 8.46 and as low as 4.60, with a median of 5.60.
Investors could also keep in mind Penske Automotive Group (PAG), an Automotive - Retail and Whole Sales stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Shares of Penske Automotive Group are currently trading at a forward earnings multiple of 7.35 and a PEG ratio of 0.35 compared to its industry's P/E and PEG ratios of 6.25 and 0.32, respectively.
Over the past year, PAG's P/E has been as high as 11.62, as low as 7.12, with a median of 8.74; its PEG ratio has been as high as 2.09, as low as 0.35, with a median of 0.57 during the same time period.
Furthermore, Penske Automotive Group holds a P/B ratio of 2.01 and its industry's price-to-book ratio is 2.27. PAG's P/B has been as high as 2.31, as low as 1.45, with a median of 1.98 over the past 12 months.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Group 1 Automotive and Penske Automotive Group are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, GPI and PAG feels like a great value stock at the moment.
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