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Are Investors Undervaluing Best Buy (BBY) Right Now?

Zacks Equity Research
·2 min read

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.

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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is Best Buy (BBY). BBY is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 17.83, while its industry has an average P/E of 20.43. Over the past 52 weeks, BBY's Forward P/E has been as high as 18.83 and as low as 7.95, with a median of 13.86.

Investors should also note that BBY holds a PEG ratio of 2.10. 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. BBY's industry currently sports an average PEG of 2.29. Over the last 12 months, BBY's PEG has been as high as 2.48 and as low as 0.98, with a median of 1.63.

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. BBY has a P/S ratio of 0.66. This compares to its industry's average P/S of 0.77.

These are just a handful of the figures considered in Best Buy'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 BBY is an impressive value stock right now.


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Zacks Investment Research