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AN vs. CRMT: Which Stock Should Value Investors Buy Now?

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Zacks Equity Research
·2 min read
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Investors looking for stocks in the Automotive - Retail and Whole Sales sector might want to consider either AutoNation (AN) or America's Car-Mart (CRMT). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

AutoNation and America's Car-Mart are both sporting a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

AN currently has a forward P/E ratio of 11.75, while CRMT has a forward P/E of 14.30. We also note that AN has a PEG ratio of 1.05. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CRMT currently has a PEG ratio of 1.06.

Another notable valuation metric for AN is its P/B ratio of 2.38. 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. By comparison, CRMT has a P/B of 3.

These are just a few of the metrics contributing to AN's Value grade of A and CRMT's Value grade of C.

Both AN and CRMT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that AN is the superior value option right now.


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AutoNation, Inc. (AN) : Free Stock Analysis Report
 
Americas CarMart, Inc. (CRMT) : Free Stock Analysis Report
 
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