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.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is Group 1 Automotive (GPI). 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 7.30. This compares to its industry's average Forward P/E of 9.50. Over the past 52 weeks, GPI's Forward P/E has been as high as 8.75 and as low as 5.56, with a median of 7.06.
GPI is also sporting a PEG ratio of 1.23. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. GPI's PEG compares to its industry's average PEG of 1.35. Over the last 12 months, GPI's PEG has been as high as 4.48 and as low as 1.15, with a median of 1.71.
We should also highlight that GPI has a P/B ratio of 1.23. 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. GPI's current P/B looks attractive when compared to its industry's average P/B of 1.61. Over the past year, GPI's P/B has been as high as 1.41 and as low as 0.82, with a median of 1.12.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. GPI has a P/S ratio of 0.12. This compares to its industry's average P/S of 0.24.
Finally, our model also underscores that GPI has a P/CF ratio of 6.15. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. GPI's P/CF compares to its industry's average P/CF of 7.32. Within the past 12 months, GPI's P/CF has been as high as 7.03 and as low as 3.11, with a median of 4.97.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Group 1 Automotive is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, GPI feels like a great value stock at the moment.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.