Is Group 1 Automotive (GPI) Stock Undervalued 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...
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
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 a Value grade of A. The stock holds a P/E ratio of 6.16, while its industry has an average P/E of 7.67. Over the past 52 weeks, GPI's Forward P/E has been as high as 9.67 and as low as 5.89, with a median of 7.67.
Another notable valuation metric for GPI is its P/B ratio of 1.70. 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 2.39. Over the past year, GPI's P/B has been as high as 2.19 and as low as 1.19, with a median of 1.75.
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 0.23. This compares to its industry's average P/S of 0.41.
Finally, investors should note that GPI has a P/CF ratio of 5.10. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 9.75. Over the past year, GPI's P/CF has been as high as 8.46 and as low as 4.63, with a median of 6.79.
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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