Are Investors Undervaluing AutoNation (AN) 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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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.
AutoNation (AN) is a stock many investors are watching right now. AN is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value.
We also note that AN holds a PEG ratio of 0.39. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. AN's industry has an average PEG of 0.45 right now. Over the last 12 months, AN's PEG has been as high as 1.31 and as low as 0.38, with a median of 0.91.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. AN has a P/S ratio of 0.31. This compares to its industry's average P/S of 0.43.
Finally, our model also underscores that AN has a P/CF ratio of 6.53. 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 stock's P/CF looks attractive against its industry's average P/CF of 10.70. Over the past year, AN's P/CF has been as high as 9.20 and as low as 5.56, with a median of 7.40.
Value investors will likely look at more than just these metrics, but the above data helps show that AutoNation is likely undervalued currently. And when considering the strength of its earnings outlook, AN sticks out at as one of the market's strongest value stocks.
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