Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One stock to keep an eye on is Asbury Automotive Group (ABG). ABG is currently sporting a Zacks Rank #2 (Buy) and an A for Value.
Another notable valuation metric for ABG is its P/B ratio of 1.26. 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. This company's current P/B looks solid when compared to its industry's average P/B of 2.20. Over the past year, ABG's P/B has been as high as 1.71 and as low as 1.14, with a median of 1.32.
Finally, investors will want to recognize that ABG has a P/CF ratio of 7.16. 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. ABG's P/CF compares to its industry's average P/CF of 10.21. Within the past 12 months, ABG's P/CF has been as high as 11.08 and as low as 6.54, with a median of 8.63.
If you're looking for another solid Automotive - Retail and Whole Sales value stock, take a look at AutoNation (AN). AN is a Zacks Rank of #2 (Buy) stock with a Value score of A.
AutoNation is trading at a forward earnings multiple of 10.62 at the moment, with a PEG ratio of 0.96. This compares to its industry's average P/E of 8.60 and average PEG ratio of 1.07.
Over the past year, AN's P/E has been as high as 11.17, as low as 8.21, with a median of 9.60; its PEG ratio has been as high as 3.69, as low as 0.79, with a median of 1.05 during the same time period.
Furthermore, AutoNation holds a P/B ratio of 3.33 and its industry's price-to-book ratio is 2.20. AN's P/B has been as high as 3.47, as low as 2.44, with a median of 2.94 over the past 12 months.
These are only a few of the key metrics included in Asbury Automotive Group and AutoNation strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, ABG and AN look like an impressive value stock at the moment.
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Asbury Automotive Group, Inc. (ABG): Free Stock Analysis Report AutoNation, Inc. (AN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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