Are Investors Undervaluing LKQ (LKQ) 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. Nevertheless, we are always paying attention to...
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.
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.
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 to watch right now is LKQ (LKQ). LKQ is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 13.21. This compares to its industry's average Forward P/E of 13.83. Over the past year, LKQ's Forward P/E has been as high as 16.88 and as low as 11.62, with a median of 13.88.
Another notable valuation metric for LKQ is its P/B ratio of 2.51. 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. LKQ's current P/B looks attractive when compared to its industry's average P/B of 2.73. Over the past year, LKQ's P/B has been as high as 2.64 and as low as 1.56, with a median of 2.29.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. LKQ has a P/S ratio of 1.19. This compares to its industry's average P/S of 1.37.
Finally, our model also underscores that LKQ has a P/CF ratio of 12.21. 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 14.82. Over the past year, LKQ's P/CF has been as high as 14.67 and as low as 9.36, with a median of 12.36.
These figures are just a handful of the metrics value investors tend to look at, but they help show that LKQ is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, LKQ feels like a great value stock at the moment.
Zacks' Top Picks to Cash in on Artificial Intelligence
In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
LKQ Corporation (LKQ): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research