Should Value Investors Buy Aaron's (AAN) Stock?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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.
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 #2 (Buy) and a Value grade of A.
AAN is also sporting a PEG ratio of 0.87. 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. AAN's industry currently sports an average PEG of 1.10. AAN's PEG has been as high as 1.04 and as low as 0.75, with a median of 0.93, all within the past year.
Another valuation metric that we should highlight is AAN's P/B ratio of 2.30. Investors use the P/B ratio to look at a stock's market value versus 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 3.76. AAN's P/B has been as high as 2.39 and as low as 1.54, with a median of 2.03, over the past year.
Finally, investors will want to recognize that AAN has a P/CF ratio of 2.01. 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. This stock's P/CF looks attractive against its industry's average P/CF of 6.22. Within the past 12 months, AAN's P/CF has been as high as 2.09 and as low as 1.34, with a median of 1.78.
Value investors will likely look at more than just these metrics, but the above data helps show that Aaron's is likely undervalued currently. And when considering the strength of its earnings outlook, AAN sticks out at as one of the market's strongest value stocks.
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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.