Should Value Investors Buy Group 1 Automotive (GPI) Stock?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 to watch right now is Group 1 Automotive (GPI). GPI is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 9.11, which compares to its industry's average of 10.39. Over the past year, GPI's Forward P/E has been as high as 9.75 and as low as 5.56, with a median of 7.50.
GPI is also sporting a PEG ratio of 1.53. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. GPI's industry currently sports an average PEG of 1.63. Within the past year, GPI's PEG has been as high as 4.12 and as low as 1.15, with a median of 1.64.
Investors should also recognize that GPI has a P/B ratio of 1.59. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.81. Over the past 12 months, GPI's P/B has been as high as 1.64 and as low as 0.82, with a median of 1.23.
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 0.16. This compares to its industry's average P/S of 0.26.
Finally, investors should note that GPI has a P/CF ratio of 7.93. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. GPI's current P/CF looks attractive when compared to its industry's average P/CF of 8.47. GPI's P/CF has been as high as 8.19 and as low as 3.11, with a median of 5.88, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Group 1 Automotive is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, GPI feels like a great value stock at the moment.
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Group 1 Automotive, Inc. (GPI) : Free Stock Analysis Report
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