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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
One company to watch right now is Group 1 Automotive (GPI – Free Report) . GPI is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
Investors should also recognize that GPI has a P/B ratio of 1.76. The P/B is a method of comparing a stock’s market value to 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. Within the past 52 weeks, GPI’s P/B has been as high as 2.17 and as low as 1.28, with a median of 1.65.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock’s price with the company’s revenue. 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 0.26. This compares to its industry’s average P/S of 0.27.
Finally, our model also underscores that GPI has a P/CF ratio of 8.35. 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 stock’s P/CF looks attractive against its industry’s average P/CF of 9.69. Over the past 52 weeks, GPI’s P/CF has been as high as 10.31 and as low as 5.13, with a median of 7.44.
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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