7 Most Undervalued Auto Stocks To Buy According To Analysts

4. Rush Enterprises, Inc. (NASDAQ:RUSHA)

Number of Hedge Fund Holders: 18

Forward PE Ratio: 14.66

Average Price Target Upside: 22%

Rush Enterprises, Inc. (NASDAQ:RUSHA) is a provider of solutions for the commercial vehicle industry. It operates Rush Truck Centers, the largest network of commercial vehicle dealerships in North America. Rush has over 200 dealer networks across the US and Canada. It ranks at 4 on our list of most undervalued auto stocks.

The centers represent manufacturers like Peterbilt, International, Ford, and others, and offer a range of services including vehicle sales, parts, service, body shop operations, and financial services.

Apart from Rush Truck Centers, the company’s divisions include Rush Truck Leasing for leasing and rentals, and Rush Bus Centers specializing in school and commercial buses. Additional offerings cover crane and refuse systems, towing solutions, vehicle insurance, and custom chrome parts through brands like Chrome Country.

Rush (NASDAQ:RUSHA) also focuses on CNG fuel systems with its joint venture, Cummins Clean Fuel Technologies, and offers vehicle up-fitting services through Custom Vehicle Solutions. Its specialized businesses include Perfection Truck Parts & Equipment, The House of Trucks, and World Wide Tires, each providing tailored products and services for commercial transportation.

In the second quarter, the company reported revenues of $2 billion and a net income of $78.7 million, or $0.97 per diluted share. The company announced a 5.9% increase in its quarterly cash dividend, now at $0.18 per share.

Despite challenges in the trucking industry, particularly due to low freight rates, company management noted strength in key customer segments like the public sector and vocational, which strengthened Class 8 truck sales and market share.

Aftermarket product demand declined slightly, with parts, service, and body shop revenues dropping 3.6% year-over-year. Truck sales remained strong, with 4,128 new Class 8 trucks sold, but were impacted by an 18.6% decline in the U.S. Class 8 retail sales due to lingering freight recession and higher order cancellations. Class 4 through 7 truck sales showed resilience, with 3,691 units sold. Used truck sales fell 7.8% year-over-year due to weak demand and increased competition from new trucks.

For the future, Rush (NASDAQ:RUSHA) expects the challenging market conditions to persist, particularly in new Class 8 truck sales, while vocational truck sales should remain strong. The company is focusing on expense reductions and leveraging its diverse customer base to navigate the tough market environment. Nevertheless, the CEO and President, Rusty Rush is optimistic about the company’s ability to perform well in downturns.