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The Zacks Analyst Blog Highlights: AutoNation, Group 1 Automotive, Lithia Motors and Asbury Automotive

Zacks Equity Research
·6 mins read

For Immediate Release

Chicago, IL – September 2, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: AutoNation, Inc. AN, Group 1 Automotive, Inc. GPI, Lithia Motors, Inc. LAD and Asbury Automotive Group, Inc. ABG.

Here are highlights from Tuesday’s Analyst Blog:

4 Undervalued Stocks to Snap Up Right Now

Sometimes, it pays to remember that the markets are always, ultimately, rational.

Which basically just means that good news is rewarded and bad news is punished.

So when there’s good news flowing in, you’ll typically see shares continuing to rise as more and more people find out. Conversely, when there’s some bad news, you’ll find more and more people jumping out of a stock as they find out.

This kind of behavior creates momentum in share prices, whether upward or downward.

When they’re moving higher, you could ride the momentum to take some gains.

But when stocks with good growth prospects and other strengths are trading lower on negative news, it also makes sense to track their decline. That’s because the negative sentiment could push prices below their intrinsic value, at which point they would enter buy zone again.

The stocks I’ve picked today have seen significant upward revisions to their earnings estimates despite expected revenue declines this year. This strong earnings growth hasn’t been priced in yet, despite recent momentum. So with Zacks Rank #1, Value Score A, Growth Score A and Momentum Score A, these stocks are hard to pass up.

AutoNation

AutoNation, the largest automotive retailer in the U.S., also offers vehicle maintenance and repair services, vehicle parts, extended service contracts, vehicle protection products and other aftermarket products. In addition, it arranges financing for vehicle purchases through third-party sources.

Industry: Automotive - Retail and Wholesale (top 1%)

2020 sales are currently expected to decline 6.5% and grow 5.2% in 2021.

2020 earnings are expected to grow 20.0% this year (up 13.8% in the last 30 days) and 2021 earnings are expected to grow 11.6% (up 9.1% in the last 30 days).

Valuation: On a PEG basis, the shares are trading at their lowest point of 1.20X over the past year. The current P/S ratio is 0.25X. So the shares are undervalued.

Group 1 Automotive

Group 1 is one of the leading automotive retailers in the world with 119 dealerships in the U.S., 50 in the UK and 17 in Brazil. Through these dealerships, the firm sells new and used cars and light trucks, offers maintenance and repair services, replacement parts and aftermarket automotive products. As with most of the big auto retailers, it also offers vehicle financing, insurance and service contracts.

Industry: Automotive - Retail and Wholesale (top 1%)

2020 sales are currently expected to decline 11.4% and grow 5.8% in 2021.

2020 earnings are expected to grow 4.2% this year (up 56.7% in the last 30 days) and 2021 earnings are expected to grow 14.5% (up 16.4% in the last 30 days).

Valuation: On a PEG basis, the shares are trading at 1.29X, which is below their median value of 1.51X over the past year. The current P/S ratio is 0.14X. So the shares are undervalued.

Lithia Motors

Lithia Motors is one of the leading automotive retailers of new and used vehicles, and related services in the United States. As of Dec 31, 2019, the company offered 28 vehicle brands across 181 stores in 18 U.S. states as well as through its Lithia.com and DCHauto.com websites. The core brands offered by Lithia Motors include Chrysler, General Motors, Toyota, Subaru, Honda, Acura, Ford, BMW, MINI, Nissan and Hyundai.

Industry: Automotive - Retail and Wholesale (top 1%)

2020 sales are currently expected to decline 1.2% and grow 23.8% in 2021.

2020 earnings are expected to grow 17.5% this year (up 16.1% in the last 30 days) and 2021 earnings are expected to grow 30.2% (up 13.6% in the last 30 days).

Valuation: On a PEG basis, the shares are trading at 4.41X, which is between their median value of 1.36X and high of 9.15X over the past year. The current P/S ratio is 0.47X. So the shares are undervalued.

Asbury Automotive Group

Asbury Automotive offers customers new and used vehicle sales and related financing and insurance, vehicle maintenance and repair services, and replacement parts and service contracts through franchised dealership locations and stand-alone stores.

Industry: Automotive - Retail and Wholesale (top 1% of 250+ Zacks-classified industries)

2020 sales are currently expected to decline 2.3% and grow 19.1% in 2021.

2020 earnings are expected to grow 10.9% this year (up 13.3% in the last 30 days) and 2021 earnings are expected to grow 18.5% (up 7.7% in the last 30 days).

Valuation: On a PEG basis, the shares are trading at 0.48X, which is between the high of 1.21X and median of 0.64X over the past year. The current P/S is 0.30X. Therefore, the shares are undervalued.

Wrapping Up

Earnings season creates many opportunities for growth. But we have to be nimble, and snap up the opportunities quickly, or we will miss the bus. So jump on and enjoy the ride!

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Zacks Investment Research

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.


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AutoNation, Inc. (AN) : Free Stock Analysis Report
 
Lithia Motors, Inc. (LAD) : Free Stock Analysis Report
 
Group 1 Automotive, Inc. (GPI) : Free Stock Analysis Report
 
Asbury Automotive Group, Inc. (ABG) : Free Stock Analysis Report
 
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