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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. 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.
One stock to keep an eye on is Brinker International (EAT). EAT is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 9.21. This compares to its industry's average Forward P/E of 26.19. Over the past year, EAT's Forward P/E has been as high as 11.62 and as low as 9.10, with a median of 9.97.
Investors will also notice that EAT has a PEG ratio of 1.20. 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. EAT's PEG compares to its industry's average PEG of 2.35. Within the past year, EAT's PEG has been as high as 1.85 and as low as 1.12, with a median of 1.26.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. EAT has a P/S ratio of 0.46. This compares to its industry's average P/S of 0.95.
Finally, our model also underscores that EAT has a P/CF ratio of 5.44. 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. EAT's P/CF compares to its industry's average P/CF of 17.37. Over the past 52 weeks, EAT's P/CF has been as high as 6.16 and as low as 4.69, with a median of 5.48.
These are just a handful of the figures considered in Brinker International'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 EAT is an impressive value stock right now.
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February 19, 2020 at 11:50PM
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Is Brinker International (EAT) a Great Value Stock Right Now? - Yahoo Finance
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