Is Sonic Automotive (SAH) Stock Undervalued 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.
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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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.
One company value investors might notice is Sonic Automotive (SAH). SAH is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
Investors should also recognize that SAH has a P/B ratio of 1.19. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.56. Over the past 12 months, SAH's P/B has been as high as 1.22 and as low as 0.70, with a median of 0.95.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. SAH has a P/S ratio of 0.1. This compares to its industry's average P/S of 0.23.
Finally, we should also recognize that SAH has a P/CF ratio of 5.30. 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. SAH's P/CF compares to its industry's average P/CF of 6.94. SAH's P/CF has been as high as 5.31 and as low as 3, with a median of 4.31, all within the past year.
These are just a handful of the figures considered in Sonic Automotive'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 SAH is an impressive value stock right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Sonic Automotive, Inc. (SAH) : Free Stock Analysis Report
To read this article on Zacks.com click here.
