Is Big Lots (BIG) a Great Value Stock 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.
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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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), as well as a Value grade of A.
Investors should also note that BIG holds a PEG ratio of 1.76. 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 industry has an average PEG of 2.70 right now. BIG's PEG has been as high as 3.78 and as low as 0.50, with a median of 1.02, all within the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. 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 0.33. This compares to its industry's average P/S of 0.97.
These are only a few of the key metrics included in Big Lots's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, BIG looks like an impressive 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.