Is Asbury Automotive Group (ABG) stock currently undervalued?
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While the proven Zacks Rank emphasizes earnings estimates and revisions of estimates to find solid stocks, we also know that investors tend to develop their own individual strategies. With that in mind, we always look at trends in value, growth, and momentum to uncover great companies.
Looking at the history of these trends, perhaps none is more popular than value investing. This strategy simply seeks to identify companies that are undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are undervalued by the market as a whole.
In addition to the Zacks Rankings, investors looking for stocks with specific characteristics can use our Style Scores system. Of course, value investors will be more interested in the “Value” category of the system. Stocks with “A” ratings for value and high Zacks ranks are among the most profitable stocks available at any given time.
One stock to watch is Asbury Automotive Group (ABG). ABG currently holds a Zacks rank of # 2 (Buy) and a value rating of A.
Value investors also frequently use the P / S ratio. This measurement is obtained by dividing the price of a stock by the turnover of the company. Some people prefer this measure because sales are more difficult to manipulate on an income statement. This means that it could be a truer performance indicator. ABG has a P / S ratio of 0.4. This compares to its industry’s average P / S of 0.41.
Finally, it must also be recognized that ABG has a P / CF ratio of 7.86. This data point takes into account a company’s operating cash flow and is frequently used to find undervalued companies given their strong cash flow outlook. This stock’s P / CF looks attractive compared to its industry’s average P / CF of 10.34. ABG’s P / CF has been as high as 12.40 and as low as 6.77, with a median of 9.05, all over the past year.
These numbers are just a few of the value metrics investors tend to watch, but they help show that Asbury Automotive Group is likely undervalued right now. Given this, along with its strong earnings outlook, ABG currently feels like a high value stock.
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