Are Investors Undervaluing Penske Automotive (PAG) 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...
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.
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 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 Penske Automotive (PAG). PAG is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A.
Another notable valuation metric for PAG is its P/B ratio of 2.16. 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. This stock's P/B looks solid versus its industry's average P/B of 2.48. Over the past 12 months, PAG's P/B has been as high as 2.31 and as low as 1.33, with a median of 1.73.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. PAG has a P/S ratio of 0.34. This compares to its industry's average P/S of 0.45.
Finally, investors will want to recognize that PAG has a P/CF ratio of 7.52. 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. PAG's current P/CF looks attractive when compared to its industry's average P/CF of 10.14. Over the past year, PAG's P/CF has been as high as 10.37 and as low as 5.61, with a median of 8.
Value investors will likely look at more than just these metrics, but the above data helps show that Penske Automotive is likely undervalued currently. And when considering the strength of its earnings outlook, PAG sticks out at as one of the market's strongest value stocks.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>
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
Penske Automotive Group, Inc. (PAG): Free Stock Analysis Report
To read this article on Zacks.com click here.