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 the latest value, growth, and momentum trends to underscore strong picks.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 stock to keep an eye on is AutoNation (AN). AN is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 11.65. This compares to its industry's average Forward P/E of 13.72. Over the past year, AN's Forward P/E has been as high as 14.25 and as low as 4.56, with a median of 10.17.
AN is also sporting a PEG ratio of 1.04. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. AN's industry currently sports an average PEG of 2.32. AN's PEG has been as high as 4.19 and as low as 0.90, with a median of 1.28, all within the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. AN has a P/S ratio of 0.36. This compares to its industry's average P/S of 0.5.
Finally, we should also recognize that AN has a P/CF ratio of 8.53. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 11.41. Within the past 12 months, AN's P/CF has been as high as 8.73 and as low as 3.22, with a median of 5.94.
These are just a handful of the figures considered in AutoNation's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that AN is an impressive value stock right now.
