Should Value Investors Buy Avis Budget Group (CAR) Stock?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is Avis Budget Group (CAR). CAR is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. CAR has a P/S ratio of 0.38. This compares to its industry's average P/S of 0.56.

Finally, investors should note that CAR has a P/CF ratio of 0.98. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. CAR's current P/CF looks attractive when compared to its industry's average P/CF of 3.20. Within the past 12 months, CAR's P/CF has been as high as 1.08 and as low as 0.17, with a median of 0.73.

Value investors will likely look at more than just these metrics, but the above data helps show that Avis Budget Group is likely undervalued currently. And when considering the strength of its earnings outlook, CAR sticks out at as one of the market's strongest value stocks.

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