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Is Brinker International (EAT) a Great Value Stock Right Now?

Zacks Equity Research

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 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 Brinker International (EAT). EAT is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 9.18. This compares to its industry's average Forward P/E of 26.31. EAT's Forward P/E has been as high as 13.91 and as low as 9.10, with a median of 11.22, all within the past year.

Investors should also note that EAT holds a PEG ratio of 1.26. 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 2.26. Over the past 52 weeks, EAT's PEG has been as high as 1.57 and as low as 1.09, with a median of 1.27.

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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. EAT has a P/S ratio of 0.45. This compares to its industry's average P/S of 0.88.

Finally, we should also recognize that EAT has a P/CF ratio of 4.86. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 18.63. Over the past year, EAT's P/CF has been as high as 7.86 and as low as 4.69, with a median of 5.76.

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


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