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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is Group 1 Automotive (GPI). GPI is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A.
Investors should also recognize that GPI has a P/B ratio of 1.88. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 2.21. Over the past 12 months, GPI's P/B has been as high as 2.17 and as low as 1.54, with a median of 1.87.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. GPI has a P/S ratio of 0.22. This compares to its industry's average P/S of 0.26.
Finally, our model also underscores that GPI has a P/CF ratio of 9.66. 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. GPI's P/CF compares to its industry's average P/CF of 10.34. Over the past year, GPI's P/CF has been as high as 10.34 and as low as 7.33, with a median of 9.10.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Group 1 Automotive is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, GPI feels like a great value stock at the moment.
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Group 1 Automotive, Inc. (GPI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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