Advertisement
U.S. markets close in 3 hours 25 minutes
  • S&P 500

    5,250.31
    +1.82 (+0.03%)
     
  • Dow 30

    39,752.68
    -7.40 (-0.02%)
     
  • Nasdaq

    16,384.04
    -15.48 (-0.09%)
     
  • Russell 2000

    2,133.46
    +19.11 (+0.90%)
     
  • Crude Oil

    82.68
    +1.33 (+1.63%)
     
  • Gold

    2,237.90
    +25.20 (+1.14%)
     
  • Silver

    24.90
    +0.14 (+0.58%)
     
  • EUR/USD

    1.0805
    -0.0025 (-0.23%)
     
  • 10-Yr Bond

    4.1890
    -0.0070 (-0.17%)
     
  • dólar/libra

    1.2642
    +0.0004 (+0.03%)
     
  • USD/JPY

    151.3210
    +0.0750 (+0.05%)
     
  • Bitcoin USD

    70,954.06
    +1,866.91 (+2.70%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,961.12
    +29.14 (+0.37%)
     
  • Nikkei 225

    40,168.07
    -594.66 (-1.46%)
     

Should Value Investors Buy AutoNation (AN) Stock?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company to watch right now is AutoNation (AN). AN is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

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. AN has a P/S ratio of 0.24. This compares to its industry's average P/S of 0.35.

Finally, our model also underscores that AN has a P/CF ratio of 4.46. 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. AN's current P/CF looks attractive when compared to its industry's average P/CF of 5.71. AN's P/CF has been as high as 4.99 and as low as 3.18, with a median of 4.01, all within the past year.

Investors could also keep in mind Rush Enterprises (RUSHA), an Automotive - Retail and Whole Sales stock with a Zacks Rank of # 2 (Buy) and Value grade of A.

Rush Enterprises is currently trading with a Forward P/E ratio of 10.61 while its PEG ratio sits at 0.71. Both of the company's metrics compare favorably to its industry's average P/E of 6.70 and average PEG ratio of 0.96.

Over the past year, RUSHA's P/E has been as high as 11.78, as low as 8.03, with a median of 9.80; its PEG ratio has been as high as 0.79, as low as 0.54, with a median of 0.66 during the same time period.

Additionally, Rush Enterprises has a P/B ratio of 1.70 while its industry's price-to-book ratio sits at 2.05. For RUSHA, this valuation metric has been as high as 2.03, as low as 1.43, with a median of 1.69 over the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that AutoNation and Rush Enterprises are likely undervalued currently. And when considering the strength of its earnings outlook, AN and RUSHA sticks out as one of the market's strongest value stocks.

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

AutoNation, Inc. (AN) : Free Stock Analysis Report

Rush Enterprises, Inc. (RUSHA) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

Advertisement