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Is KAR Auction Services (KAR) a Great Value Stock Right Now?

Zacks Equity Research
·2 mins read

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 an A grade for Value. The stock has a Forward P/E ratio of 12.84. This compares to its industry's average Forward P/E of 19.97. 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 15.48.

Investors should also note that KAR holds a PEG ratio of 2.08. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. KAR's industry currently sports an average PEG of 2.79. Within the past year, KAR's PEG has been as high as 4.28 and as low as 0.60, with a median of 1.43.

Finally, investors will want to recognize that KAR has a P/CF ratio of 8.57. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 14.79. KAR's P/CF has been as high as 10.51 and as low as 3.41, with a median of 6.85, all within the past year.

These are only a few of the key metrics included in KAR Auction Services's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, KAR looks like an impressive value stock at the moment.


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Zacks Investment Research