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Are Investors Undervaluing Group 1 Automotive (GPI) Right Now?

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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.

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.

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 stock to keep an eye on is Group 1 Automotive (GPI - Free Report) . GPI is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 4.91, while its industry has an average P/E of 11.08. Over the past year, GPI's Forward P/E has been as high as 9.75 and as low as 4.91, with a median of 8.10.

GPI is also sporting a PEG ratio of 0.97. 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 PEG compares to its industry's average PEG of 1.81. Within the past year, GPI's PEG has been as high as 2.60 and as low as 0.97, with a median of 1.54.

Another valuation metric that we should highlight is GPI's P/B ratio of 0.90. 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 attractive against its industry's average P/B of 1.84. GPI's P/B has been as high as 1.71 and as low as 0.90, with a median of 1.32, over the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. GPI has a P/S ratio of 0.08. This compares to its industry's average P/S of 0.19.

Finally, investors will want to recognize that GPI has a P/CF ratio of 4.58. 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 8.63. GPI's P/CF has been as high as 8.52 and as low as 4.58, with a median of 6.56, all within the past year.

These are just a handful of the figures considered in Group 1 Automotive'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 GPI is an impressive value stock right now.


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