Is Group 1 Automotive Stock (GPI) Currently Undervalued? – October 25, 2021
At Zacks, we focus on Zacks’ proven ranking system, which emphasizes profit estimates and estimate reviews to find great stocks. Nevertheless, we are always attentive to the latest trends in value, growth and dynamism to highlight the right choices.
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 proven valuation metrics, to find these stocks.
Zacks developed the innovative Style Scores system to highlight stocks with specific characteristics. For example, value investors will be interested in stocks with good ratings in the “Value” category. When paired with a high Zacks ranking, “A” ratings in the Value category are among the strongest value stocks on the market today.
One stock to watch is automotive group 1 (GPI – Free report). GPI currently has a Zacks rating of # 2 (Buy) and an A for value. The stock holds a P / E ratio of 6.67, while its industry has an average P / E of 8.06. Over the past 52 weeks, GPI’s forward P / E has been as high as 9.62 and as low as 5.67, with a median of 7.46.
Another notable valuation metric for GPI is its P / N ratio of 2.05. The P / B ratio pits the market value of a stock against its book value, which is defined as total assets minus total liabilities. GPI’s current P / B looks attractive compared to its industry average P / B of 2.73. Over the past 12 months, GPI’s P / B has been as high as 2.19 and as low as 1.43, with a median of 1.81.
Value investors also use the P / S ratio. The P / S ratio is calculated as the price divided by the sales. This is a popular metric because sales are more difficult to manipulate on an income statement, so they are often seen as a better indicator of performance. GPI has a P / S ratio of 0.28. This compares to its industry’s average P / S of 0.5.
Finally, we also have to recognize that GPI has a P / CF ratio of 6.15. This figure highlights a company’s operating cash flow and can be used to find undervalued companies given their impressive cash flow prospects. This stock’s P / CF looks attractive compared to its industry’s average P / CF of 11.17. GPI’s P / CF has been as high as 8.46 and as low as 4.63, with a median of 6.56, all in the past year.
Value investors will likely look at more than these metrics, but the data above helps show that the Group 1 auto is likely undervalued right now. And given its strong earnings outlook, GPI stands out as one of the strongest value stocks on the market.