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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 value investors might notice is Sonic Automotive (SAH). SAH is currently sporting a Zacks Rank #1 (Strong Buy), as well as an A grade for Value.
Investors should also note that SAH holds a PEG ratio of 0.63. 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. SAH's PEG compares to its industry's average PEG of 0.88. Over the last 12 months, SAH's PEG has been as high as 0.74 and as low as 0.44, with a median of 0.53.
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. SAH has a P/S ratio of 0.18. This compares to its industry's average P/S of 0.28.
Finally, our model also underscores that SAH has a P/CF ratio of 8.93. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 10.91. SAH's P/CF has been as high as 10.08 and as low as 5.06, with a median of 6.80, all within the past year.
These are only a few of the key metrics included in Sonic Automotive's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SAH looks like an impressive value stock at the moment.
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Sonic Automotive, Inc. (SAH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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