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.
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.
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.
Group 1 Automotive (GPI - Free Report) is a stock many investors are watching right now. GPI is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 7.65. This compares to its industry's average Forward P/E of 9.02. Over the past year, GPI's Forward P/E has been as high as 10.87 and as low as 6.66, with a median of 8.55.
GPI is also sporting a PEG ratio of 1.07. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. GPI's PEG compares to its industry's average PEG of 1.12. Over the last 12 months, GPI's PEG has been as high as 1.55 and as low as 0.95, with a median of 1.31.
Another notable valuation metric for GPI is its P/B ratio of 1.21. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.62. GPI's P/B has been as high as 1.72 and as low as 1.08, with a median of 1.36, over the past year.
Finally, investors will want to recognize that GPI has a P/CF ratio of 4.54. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 5.89. Within the past 12 months, GPI's P/CF has been as high as 8.72 and as low as 4.32, with a median of 5.32.
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.