Are Investors Undervaluing Lithia Motors (LAD) Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Neverthe...
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
One company value investors might notice is Lithia Motors (LAD). LAD is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A.
We also note that LAD holds a PEG ratio of 0.48. 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. LAD's industry currently sports an average PEG of 0.50. Over the past 52 weeks, LAD's PEG has been as high as 5.34 and as low as 0.46, with a median of 0.69.
Investors should also recognize that LAD has a P/B ratio of 2.35. 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 stock's P/B looks attractive against its industry's average P/B of 2.36. Over the past 12 months, LAD's P/B has been as high as 4.83 and as low as 2.35, with a median of 3.66.
These are only a few of the key metrics included in Lithia Motors's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, LAD looks like an impressive value stock at the moment.
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Lithia Motors, Inc. (LAD): Free Stock Analysis Report
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