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Is Avis Budget Group (CAR) Stock Undervalued Right Now?

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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.

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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 Avis Budget Group (CAR - Free Report) . CAR is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 10.29, while its industry has an average P/E of 22.80. Over the past year, CAR's Forward P/E has been as high as 185.44 and as low as -790.64, with a median of 15.61.

We also note that CAR holds a PEG ratio of 0.37. 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. CAR's PEG compares to its industry's average PEG of 0.63. Over the past 52 weeks, CAR's PEG has been as high as 11.83 and as low as 0.16, with a median of 0.19.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CAR has a P/S ratio of 0.94. This compares to its industry's average P/S of 1.27.

Value investors will likely look at more than just these metrics, but the above data helps show that Avis Budget Group is likely undervalued currently. And when considering the strength of its earnings outlook, CAR sticks out at as one of the market's strongest value stocks.


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