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Is Bristol-Myers Squibb (BMY) a Great Value Stock Right Now?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

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 company to watch right now is Bristol-Myers Squibb (BMY). BMY is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 10.34 right now. For comparison, its industry sports an average P/E of 14.87. BMY's Forward P/E has been as high as 13.54 and as low as 9.22, with a median of 10.70, all within the past year.

BMY is also sporting a PEG ratio of 1.05. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. BMY's industry currently sports an average PEG of 1.92. BMY's PEG has been as high as 2.48 and as low as 1.04, with a median of 2.01, all within the past year.

Another notable valuation metric for BMY is its P/B ratio of 5.27. The P/B ratio is used to compare a stock's market value with 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 6.47. Over the past 12 months, BMY's P/B has been as high as 6.37 and as low as 4.33, with a median of 5.05.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. 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 3.89. This compares to its industry's average P/S of 4.

Finally, we should also recognize that BMY has a P/CF ratio of 14.80. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 15.63. BMY's P/CF has been as high as 41.91 and as low as 10.18, with a median of 13.36, all within the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Bristol-Myers Squibb is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, BMY feels like a great value stock at the moment.


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