Should Value Investors Buy Brinker International (EAT) Stock?
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.
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.
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.
Brinker International (EAT) is a stock many investors are watching right now. EAT is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 10.50, while its industry has an average P/E of 23.94. Over the past 52 weeks, EAT's Forward P/E has been as high as 13.91 and as low as 9.10, with a median of 10.47.
Investors should also note that EAT holds a PEG ratio of 1.61. 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 2.16. EAT's PEG has been as high as 1.85 and as low as 1.12, with a median of 1.27, all within the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. EAT has a P/S ratio of 0.51. This compares to its industry's average P/S of 0.93.
Finally, we should also recognize that EAT has a P/CF ratio of 5.98. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 17.15. Over the past year, EAT's P/CF has been as high as 7.52 and as low as 4.69, with a median of 5.51.
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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.