Should Value Investors Buy Group 1 Automotive (GPI) Stock?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 stock to keep an eye on is Group 1 Automotive (GPI). GPI is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 8.88, while its industry has an average P/E of 10.40. Over the last 12 months, GPI's Forward P/E has been as high as 9.75 and as low as 5.56, with a median of 7.71.
Investors should also note that GPI holds a PEG ratio of 1.20. 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 PEG compares to its industry's average PEG of 1.70. Over the last 12 months, GPI's PEG has been as high as 4.12 and as low as 1.15, with a median of 1.58.
Investors should also recognize 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 company's current P/B looks solid when compared to its industry's average P/B of 1.84. Over the past 12 months, GPI's P/B has been as high as 1.71 and as low as 0.82, with a median of 1.27.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. GPI has a P/S ratio of 0.16. This compares to its industry's average P/S of 0.28.
Finally, investors should note that GPI has a P/CF ratio of 7.82. 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 P/CF compares to its industry's average P/CF of 8.63. Within the past 12 months, GPI's P/CF has been as high as 8.52 and as low as 3.11, with a median of 5.99.
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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