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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.

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 use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 value investors might notice 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 holds a P/E ratio of 5.46, while its industry has an average P/E of 5.75. Over the past 52 weeks, AN's Forward P/E has been as high as 29.04 and as low as 4.99, with a median of 7.19.

Investors will also notice that AN has a PEG ratio of 0.22. 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 0.33. Over the past 52 weeks, AN's PEG has been as high as 1.23 and as low as 0.20, with a median of 0.36.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. AN has a P/S ratio of 0.28. This compares to its industry's average P/S of 0.35.

Finally, investors will want to recognize that AN has a P/CF ratio of 4.46. 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 5.91. AN's P/CF has been as high as 8.86 and as low as 3.61, with a median of 6.20, all within the past year.

Titan Machinery (TITN - Free Report) may be another strong Automotive - Retail and Whole Sales stock to add to your shortlist. TITN is a # 2 (Buy) stock with a Value grade of A.

Additionally, Titan Machinery has a P/B ratio of 1.41 while its industry's price-to-book ratio sits at 2.20. For TITN, this valuation metric has been as high as 2.09, as low as 1.16, with a median of 1.63 over the past year.

These are just a handful of the figures considered in AutoNation and Titan Machinery'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 and TITN is an impressive value stock right now.


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