Is Group 1 Automotive (GPI) a Great Value Stock 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.
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.
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 value investors might notice is Group 1 Automotive (GPI). GPI is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 8.31. This compares to its industry's average Forward P/E of 9.90. Over the past year, GPI's Forward P/E has been as high as 8.65 and as low as 5.56, with a median of 7.06.
We also note that GPI holds a PEG ratio of 1.40. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. GPI's PEG compares to its industry's average PEG of 1.51. GPI's PEG has been as high as 4.48 and as low as 1.15, with a median of 1.70, all within the past year.
Investors should also recognize that GPI has a P/B ratio of 1.41. 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 1.69. Within the past 52 weeks, 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 frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. GPI has a P/S ratio of 0.14. This compares to its industry's average P/S of 0.25.
Finally, investors will want to recognize that GPI has a P/CF ratio of 7.01. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 7.65. GPI's P/CF has been as high as 7.03 and as low as 3.11, with a median of 5.04, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Group 1 Automotive is likely undervalued currently. And when considering the strength of its earnings outlook, GPI sticks out at as one of the market's strongest value stocks.
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