Should Value Investors Buy AutoNation (AN) Stock?
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.
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 AutoNation (AN). AN is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value.
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. AN has a P/S ratio of 0.36. This compares to its industry's average P/S of 0.43.
Finally, we should also recognize that AN has a P/CF ratio of 8.86. 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. AN's current P/CF looks attractive when compared to its industry's average P/CF of 10.90. Over the past 52 weeks, AN's P/CF has been as high as 9.20 and as low as 5.19, with a median of 7.40.
These are only a few of the key metrics included in AutoNation'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, AN looks like an impressive value stock at the moment.
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AutoNation, Inc. (AN): Free Stock Analysis Report
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