Are Investors Undervaluing Big Lots (BIG) Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One stock to keep an eye on is Big Lots (BIG). BIG is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 8.20, which compares to its industry's average of 20.35. BIG's Forward P/E has been as high as 10.59 and as low as 6.27, with a median of 8.90, all within the past year.
Investors will also notice that BIG has a PEG ratio of 1.09. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. BIG's PEG compares to its industry's average PEG of 2.04. Over the past 52 weeks, BIG's PEG has been as high as 1.40 and as low as 0.58, with a median of 0.86.
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. BIG has a P/S ratio of 0.22. This compares to its industry's average P/S of 0.64.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Big Lots is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, BIG feels like a great value stock at the moment.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.