Are Investors Undervaluing Aaron's (AAN) Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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.
Aaron's (AAN) is a stock many investors are watching right now. AAN is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock has a Forward P/E ratio of 12.40. This compares to its industry's average Forward P/E of 19.30. AAN's Forward P/E has been as high as 17.65 and as low as 3.78, with a median of 12.91, all within the past year.
We should also highlight that AAN has a P/B ratio of 2.63. 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 company's current P/B looks solid when compared to its industry's average P/B of 6.19. AAN's P/B has been as high as 2.81 and as low as 0.58, with a median of 2.10, over the past year.
Finally, investors will want to recognize that AAN has a P/CF ratio of 2.05. 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. AAN's current P/CF looks attractive when compared to its industry's average P/CF of 6.82. AAN's P/CF has been as high as 2.43 and as low as 0.48, with a median of 1.79, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Aaron's is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AAN feels like a great value stock at the moment.
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