Is Sonic Automotive (SAH) 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. 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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader 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.
Sonic Automotive (SAH) is a stock many investors are watching right now. SAH is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 7.26, which compares to its industry's average of 7.53. Over the past 52 weeks, SAH's Forward P/E has been as high as 11.88 and as low as 6.98, with a median of 9.64.
Investors should also recognize that SAH has a P/B ratio of 2.41. The P/B ratio pits a stock's market value against 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 2.49. Over the past year, SAH's P/B has been as high as 2.83 and as low as 1.94, with a median of 2.29.
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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SAH has a P/S ratio of 0.2. This compares to its industry's average P/S of 0.43.
Finally, investors will want to recognize that SAH has a P/CF ratio of 6.28. 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 10.20. Over the past 52 weeks, SAH's P/CF has been as high as 72.22 and as low as 5.06, with a median of 7.66.
Value investors will likely look at more than just these metrics, but the above data helps show that Sonic Automotive is likely undervalued currently. And when considering the strength of its earnings outlook, SAH sticks out at as one of the market's strongest value stocks.
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Sonic Automotive, Inc. (SAH): Free Stock Analysis Report
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