Back to top

Image: Bigstock

Is Asbury Automotive Group (ABG) a Great Value Stock Right Now?

Read MoreHide Full Article

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.

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

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 stock to keep an eye on is Asbury Automotive Group (ABG - Free Report) . ABG is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 5.17. This compares to its industry's average Forward P/E of 5.47. Over the last 12 months, ABG's Forward P/E has been as high as 174.50 and as low as 4.57, with a median of 5.87.

We also note that ABG holds a PEG ratio of 0.28. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ABG's industry currently sports an average PEG of 0.32. Within the past year, ABG's PEG has been as high as 9.42 and as low as 0.25, with a median of 0.31.

Another valuation metric that we should highlight is ABG's P/B ratio of 1.85. 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. This stock's P/B looks solid versus its industry's average P/B of 2.09. Within the past 52 weeks, ABG's P/B has been as high as 3.46 and as low as 1.63, with a median of 2.39.

Finally, investors will want to recognize that ABG has a P/CF ratio of 5.36. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 5.60. ABG's P/CF has been as high as 8.28 and as low as 4.72, with a median of 6.43, all within the past year.

Group 1 Automotive (GPI - Free Report) may be another strong Automotive - Retail and Whole Sales stock to add to your shortlist. GPI is a # 1 (Strong Buy) stock with a Value grade of A.

Group 1 Automotive is trading at a forward earnings multiple of 4.42 at the moment, with a PEG ratio of 0.31. This compares to its industry's average P/E of 5.47 and average PEG ratio of 0.32.

Over the last 12 months, GPI's P/E has been as high as 8.32, as low as 3.97, with a median of 5.62, and its PEG ratio has been as high as 0.88, as low as 0.28, with a median of 0.46.

Group 1 Automotive also has a P/B ratio of 1.50 compared to its industry's price-to-book ratio of 2.09. Over the past year, its P/B ratio has been as high as 2.11, as low as 1.28, with a median of 1.74.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Asbury Automotive Group and Group 1 Automotive are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ABG and GPI feels like a great value stock at the moment.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Group 1 Automotive, Inc. (GPI) - free report >>

Asbury Automotive Group, Inc. (ABG) - free report >>

Published in