GPI Vs. CRMT: Which Stock Is The Better Value Option?

By Zacks Investment ResearchStock MarketsMar 04, 2020 11:40PM ET

www.investing.com/analysis/gpi-vs-crmt-which-stock-is-the-better-value-option-200513688

GPI Vs. CRMT: Which Stock Is The Better Value Option?

By Zacks Investment Research | Mar 04, 2020 11:40PM ET

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Investors looking for stocks in the Automotive - Retail and Whole Sales sector might want to consider either Group 1 Automotive (GPI) or America's Car-Mart (CRMT). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Group 1 Automotive and America's Car-Mart are both sporting a Zacks Rank of # 1 (Strong Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

GPI currently has a forward P/E ratio of 7.28, while CRMT has a forward P/E of 13.01. We also note that GPI has a PEG ratio of 1.44. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CRMT currently has a PEG ratio of 1.57.

Another notable valuation metric for GPI is its P/B ratio of 1.30. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CRMT has a P/B of 2.57.

Based on these metrics and many more, GPI holds a Value grade of B, while CRMT has a Value grade of C.

Both GPI and CRMT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GPI is the superior value option right now.

Group 1 Automotive, Inc. (GPI): Free Stock Analysis Report

America's Car-Mart, Inc. (CRMT): Free Stock Analysis Report

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GPI Vs. CRMT: Which Stock Is The Better Value Option?

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