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Are These Retail-Wholesale Stocks 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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 stock to keep an eye on is AutoNation (AN - Free Report) . AN is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value.
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. AutoNation has a P/S ratio of 0.38. This compares to its industry's average P/S of 0.47. AN's P/S has been as high as 0.43 and as low as 0.25, with a median of 0.36 over the past year.
Investors will want to recognize that AutoNation has a P/CF ratio of 7.44. 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. AutoNation's current P/CF looks attractive when compared to its industry's average P/CF of 10.45. Over the past year, AN's P/CF has been as high as 8.27 and as low as 3.98, with a median of 5.42.
Another great auto stock you could consider is Lithia Motors Inc. (LAD - Free Report) , which is a Zacks Rank #1 (Strong Buy) stock with a Value Score of A.
Shares of Lithia Motors are currently trading at a forward earnings multiple of 9.72 and a PEG ratio of 0.44 compared to its industry's P/E and PEG ratio of 7.59 and 0.45, respectively. Over the past year, LAD's P/E has been as high as 19.87, as low as 9.02, with a median of 14.44; its PEG has been as high as 0.89, as low as 0.41, with a median of 0.66 during the same time period.
Additionally, Lithia Motors has a P/B ratio of 2.41 while its industry's price-to-book ratio sits at 2.17. For LAD, this valuation metric has been as high as 4.83, as low as 2.22, with a median of 3.39 over the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that AutoNation and Lithia Motors are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AN and LAD feel like great value stocks at the moment.
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Are These Retail-Wholesale Stocks Undervalued Right Now?
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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 stock to keep an eye on is AutoNation (AN - Free Report) . AN is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value.
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. AutoNation has a P/S ratio of 0.38. This compares to its industry's average P/S of 0.47. AN's P/S has been as high as 0.43 and as low as 0.25, with a median of 0.36 over the past year.
Investors will want to recognize that AutoNation has a P/CF ratio of 7.44. 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. AutoNation's current P/CF looks attractive when compared to its industry's average P/CF of 10.45. Over the past year, AN's P/CF has been as high as 8.27 and as low as 3.98, with a median of 5.42.
Another great auto stock you could consider is Lithia Motors Inc. (LAD - Free Report) , which is a Zacks Rank #1 (Strong Buy) stock with a Value Score of A.
Shares of Lithia Motors are currently trading at a forward earnings multiple of 9.72 and a PEG ratio of 0.44 compared to its industry's P/E and PEG ratio of 7.59 and 0.45, respectively. Over the past year, LAD's P/E has been as high as 19.87, as low as 9.02, with a median of 14.44; its PEG has been as high as 0.89, as low as 0.41, with a median of 0.66 during the same time period.
Additionally, Lithia Motors has a P/B ratio of 2.41 while its industry's price-to-book ratio sits at 2.17. For LAD, this valuation metric has been as high as 4.83, as low as 2.22, with a median of 3.39 over the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that AutoNation and Lithia Motors are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AN and LAD feel like great value stocks at the moment.