Back to top

Is Sonic Automotive (SAH) 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.

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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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 company to watch right now is Sonic Automotive (SAH - Free Report) . SAH is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A.

Another valuation metric that we should highlight is SAH's P/B ratio of 1.37. 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. SAH's current P/B looks attractive when compared to its industry's average P/B of 1.49. Over the past year, SAH's P/B has been as high as 1.39 and as low as 0.70, with a median of 0.95.

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. SAH has a P/S ratio of 0.12. This compares to its industry's average P/S of 0.25.

Finally, we should also recognize that SAH has a P/CF ratio of 6.05. 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. SAH's P/CF compares to its industry's average P/CF of 7.40. SAH's P/CF has been as high as 6.10 and as low as 3, with a median of 4.35, all within the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Sonic Automotive is likely undervalued currently. And when considering the strength of its earnings outlook, SAH sticks out at as one of the market's strongest value stocks.


In-Depth Zacks Research for the Tickers Above


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


Sonic Automotive, Inc. (SAH) - free report >>

Published in