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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
Penske Automotive (PAG - Free Report) is a stock many investors are watching right now. PAG is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with P/E ratio of 9.51 right now. For comparison, its industry sports an average P/E of 11.24. PAG's Forward P/E has been as high as 12.95 and as low as 3.82, with a median of 8.94, all within the past year.
Another notable valuation metric for PAG is its P/B ratio of 1.42. The P/B ratio is used to compare a stock's market value with 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 1.50. Within the past 52 weeks, PAG's P/B has been as high as 1.66 and as low as 0.61, with a median of 1.37.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. PAG has a P/S ratio of 0.19. This compares to its industry's average P/S of 0.3.
Finally, we should also recognize that PAG has a P/CF ratio of 9.28. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 11.41. Within the past 12 months, PAG's P/CF has been as high as 9.28 and as low as 3.17, with a median of 7.17.
These are only a few of the key metrics included in Penske 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, PAG looks like an impressive value stock at the moment.