Is Bristol-Myers Squibb (BMY) a Great Value Stock 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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 Bristol-Myers Squibb (BMY). BMY is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 11.07, while its industry has an average P/E of 14.61. Over the past year, BMY's Forward P/E has been as high as 13.54 and as low as 9.22, with a median of 10.71.
We also note that BMY holds a PEG ratio of 1.11. 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. BMY's industry has an average PEG of 1.75 right now. Within the past year, BMY's PEG has been as high as 2.48 and as low as 1.07, with a median of 2.01.
Another valuation metric that we should highlight is BMY's P/B ratio of 5.63. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. BMY's current P/B looks attractive when compared to its industry's average P/B of 5.66. Over the past year, BMY's P/B has been as high as 6.42 and as low as 4.33, with a median of 5.14.
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. BMY has a P/S ratio of 3.9. This compares to its industry's average P/S of 3.98.
Finally, investors should note that BMY has a P/CF ratio of 13.23. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. BMY's P/CF compares to its industry's average P/CF of 15.02. BMY's P/CF has been as high as 42.24 and as low as 10.18, with a median of 13.23, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Bristol-Myers Squibb is likely undervalued currently. And when considering the strength of its earnings outlook, BMY sticks out at as one of the market's strongest value stocks.
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