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Are Investors Undervaluing Big Lots (BIG) Right Now?

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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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 Big Lots (BIG). BIG is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value.

We also note that BIG holds a PEG ratio of 1.08. 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. BIG's PEG compares to its industry's average PEG of 2.95. BIG's PEG has been as high as 1.57 and as low as 0.50, with a median of 0.94, all within the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. BIG has a P/S ratio of 0.3. This compares to its industry's average P/S of 0.89.

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


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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.

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