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Should Value Investors Buy AutoNation (AN) Stock?

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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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 company to watch right now is AutoNation (AN - Free Report) . AN is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 11.28 right now. For comparison, its industry sports an average P/E of 11.35. Over the last 12 months, AN's Forward P/E has been as high as 14.25 and as low as 8.68, with a median of 10.63.

Investors will also notice that AN has a PEG ratio of 0.92. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. AN's PEG compares to its industry's average PEG of 0.99. AN's PEG has been as high as 4.19 and as low as 0.89, with a median of 1.19, all within the past year.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AN has a P/S ratio of 0.39. This compares to its industry's average P/S of 0.52.

Finally, we should also recognize that AN has a P/CF ratio of 8.35. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. AN's current P/CF looks attractive when compared to its industry's average P/CF of 10.45. Within the past 12 months, AN's P/CF has been as high as 9.20 and as low as 3.99, with a median of 6.17.

These are just a handful of the figures considered in AutoNation's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that AN is an impressive value stock right now.


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