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Is Group 1 Automotive (GPI) 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 use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is Group 1 Automotive (GPI - Free Report) . GPI is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 8.22. This compares to its industry's average Forward P/E of 9.32. Over the last 12 months, GPI's Forward P/E has been as high as 10.87 and as low as 6.66, with a median of 8.78.

Investors will also notice that GPI has a PEG ratio of 1.07. 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. GPI's industry has an average PEG of 1.16 right now. GPI's PEG has been as high as 1.55 and as low as 0.95, with a median of 1.28, all within the past year.

Another valuation metric that we should highlight is GPI's P/B ratio of 1.30. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. GPI's current P/B looks attractive when compared to its industry's average P/B of 1.66. Over the past year, GPI's P/B has been as high as 1.72 and as low as 1.08, with a median of 1.38.

Finally, we should also recognize that GPI has a P/CF ratio of 4.88. 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. GPI's P/CF compares to its industry's average P/CF of 6.07. Over the past year, GPI's P/CF has been as high as 8.72 and as low as 4.32, with a median of 5.37.

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


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