Should Value Investors Buy Asbury Automotive Group (ABG) Stock?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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.
One stock to keep an eye on is Asbury Automotive Group (ABG). ABG is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
We also note that ABG holds a PEG ratio of 0.36. 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 0.53 right now. ABG's PEG has been as high as 0.45 and as low as 0.23, with a median of 0.37, all within the past year.
Investors should also recognize that ABG has a P/B ratio of 1.41. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. ABG's current P/B looks attractive when compared to its industry's average P/B of 2.27. Over the past 12 months, ABG's P/B has been as high as 1.85 and as low as 1.18, with a median of 1.49.
Finally, investors will want to recognize that ABG has a P/CF ratio of 4.33. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. ABG's current P/CF looks attractive when compared to its industry's average P/CF of 7.10. Over the past 52 weeks, ABG's P/CF has been as high as 5.15 and as low as 3.56, with a median of 4.51.
Investors could also keep in mind Lithia Motors (LAD), an Automotive - Retail and Whole Sales stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Lithia Motors is trading at a forward earnings multiple of 6.88 at the moment, with a PEG ratio of 2.29. This compares to its industry's average P/E of 6.35 and average PEG ratio of 0.53.
Over the last 12 months, LAD's P/E has been as high as 9.22, as low as 4.20, with a median of 6.63, and its PEG ratio has been as high as 7.27, as low as 0.83, with a median of 2.03.
Additionally, Lithia Motors has a P/B ratio of 1.27 while its industry's price-to-book ratio sits at 2.27. For LAD, this valuation metric has been as high as 1.55, as low as 1, with a median of 1.26 over the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Asbury Automotive Group and Lithia Motors are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ABG and LAD feels like a great value stock at the moment.
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Asbury Automotive Group, Inc. (ABG) : Free Stock Analysis Report
Lithia Motors, Inc. (LAD) : Free Stock Analysis Report
