Is KAR Auction Services (KAR) Stock Undervalued 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 the latest value, growth, and momentum trends to underscore 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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
KAR Auction Services (KAR) is a stock many investors are watching right now. KAR is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 15.78 right now. For comparison, its industry sports an average P/E of 20.59. Over the last 12 months, KAR's Forward P/E has been as high as 23.69 and as low as 7.34, with a median of 15.84.
KAR is also sporting a PEG ratio of 2.56. 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. KAR's industry currently sports an average PEG of 2.88. Over the last 12 months, KAR's PEG has been as high as 4.28 and as low as 0.60, with a median of 1.36.
Finally, investors will want to recognize that KAR has a P/CF ratio of 9.95. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 14.79. Over the past year, KAR's P/CF has been as high as 10.51 and as low as 3.41, with a median of 6.79.
These are just a handful of the figures considered in KAR Auction Services'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 KAR is an impressive value stock right now.
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