Yahoo Finance Should Value Investors Buy Group 1 Automotive (GPI) Stock?
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.
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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company to watch right now is Group 1 Automotive (GPI). GPI is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
Another notable valuation metric for GPI is its P/B ratio of 1.51. 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 solid versus its industry's average P/B of 2.20. GPI's P/B has been as high as 1.64 and as low as 1.23, with a median of 1.44, over the past year.
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 0.22. This compares to its industry's average P/S of 0.26.
Finally, investors should note that GPI has a P/CF ratio of 5.88. 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 current P/CF looks attractive when compared to its industry's average P/CF of 8.51. Over the past year, GPI's P/CF has been as high as 6.08 and as low as 3.93, with a median of 4.91.
Investors could also keep in mind Sonic Automotive (SAH), an Automotive - Retail and Whole Sales stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Additionally, Sonic Automotive has a P/B ratio of 2.27 while its industry's price-to-book ratio sits at 2.20. For SAH, this valuation metric has been as high as 2.34, as low as 1.62, with a median of 1.99 over the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Group 1 Automotive and Sonic Automotive are likely undervalued currently. And when considering the strength of its earnings outlook, GPI and SAH sticks out as one of the market's strongest value stocks.
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Group 1 Automotive, Inc. (GPI) : Free Stock Analysis Report
Sonic Automotive, Inc. (SAH) : Free Stock Analysis Report
