The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company to watch right now is Penske Automotive Group (PAG). PAG is currently holding a Zacks Rank #2 (Buy) and a Value grade of A.
Another notable valuation metric for PAG is its P/B ratio of 2.06. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. PAG's current P/B looks attractive when compared to its industry's average P/B of 2.25. Over the past year, PAG's P/B has been as high as 2.25 and as low as 1.72, with a median of 2.04.
Finally, we should also recognize that PAG has a P/CF ratio of 10.40. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 10.50. Over the past 52 weeks, PAG's P/CF has been as high as 11.13 and as low as 8.46, with a median of 10.17.
Value investors will likely look at more than just these metrics, but the above data helps show that Penske Automotive Group is likely undervalued currently. And when considering the strength of its earnings outlook, PAG sticks out as one of the market's strongest value stocks.
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Penske Automotive Group, Inc. (PAG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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