Are Investors Undervaluing Big Lots (BIG) Right Now?
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.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. 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.
Big Lots (BIG) is a stock many investors are watching right now. BIG is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 8.43. This compares to its industry's average Forward P/E of 24.17. Over the past year, BIG's Forward P/E has been as high as 12.62 and as low as 3.32, with a median of 7.44.
We also note that BIG holds a PEG ratio of 1.87. 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. BIG's PEG compares to its industry's average PEG of 2.61. Within the past year, BIG's PEG has been as high as 3.78 and as low as 0.50, with a median of 1.02.
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. BIG has a P/S ratio of 0.35. This compares to its industry's average P/S of 1.02.
These are only a few of the key metrics included in Big Lots's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, BIG looks like an impressive value stock at the moment.
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