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Are Investors Undervaluing BJ's Restaurants (BJRI) 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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 BJ's Restaurants (BJRI). BJRI is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 19.03. This compares to its industry's average Forward P/E of 25.91. BJRI's Forward P/E has been as high as 22.78 and as low as 3.55, with a median of 18.57, all within the past year.

Investors will also notice that BJRI has a PEG ratio of 1.27. 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. BJRI's industry has an average PEG of 2.33 right now. Within the past year, BJRI's PEG has been as high as 1.59 and as low as 0.24, with a median of 1.28.

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. BJRI has a P/S ratio of 0.21. This compares to its industry's average P/S of 0.44.

These are only a few of the key metrics included in BJ's Restaurants'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, BJRI looks like an impressive value stock at the moment.


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