Should Value Investors Buy CarGurus (CARG) 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, 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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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.
CarGurus (CARG) is a stock many investors are watching right now. CARG is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
CARG is also sporting a PEG ratio of 1. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CARG's industry currently sports an average PEG of 1.04. Over the past 52 weeks, CARG's PEG has been as high as 2 and as low as 0.85, with a median of 1.49.
Finally, we should also recognize that CARG has a P/CF ratio of 8.91. 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. CARG's current P/CF looks attractive when compared to its industry's average P/CF of 10.78. Within the past 12 months, CARG's P/CF has been as high as 178.14 and as low as 5.46, with a median of 7.38.
Value investors will likely look at more than just these metrics, but the above data helps show that CarGurus is likely undervalued currently. And when considering the strength of its earnings outlook, CARG sticks out at as one of the market's strongest value stocks.
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CarGurus, Inc. (CARG) : Free Stock Analysis Report
