Are Investors Undervaluing Group 1 Automotive (GPI) 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 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.
Group 1 Automotive (GPI) is a stock many investors are watching right now. GPI is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 7.73. This compares to its industry's average Forward P/E of 9.17. Over the past year, GPI's Forward P/E has been as high as 9.13 and as low as 5.56, with a median of 7.30.
Investors should also recognize that GPI has a P/B ratio of 1.28. 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 1.55. Over the past 12 months, GPI's P/B has been as high as 1.43 and as low as 0.82, with a median of 1.12.
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 0.13. This compares to its industry's average P/S of 0.23.
Finally, investors should note that GPI has a P/CF ratio of 6.03. 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. This stock's P/CF looks attractive against its industry's average P/CF of 6.92. GPI's P/CF has been as high as 6.14 and as low as 3.11, with a median of 4.88, 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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