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Are Investors Undervaluing Bloomin' Brands (BLMN) 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.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 Bloomin' Brands (BLMN). BLMN is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 12.28, while its industry has an average P/E of 23.54. BLMN's Forward P/E has been as high as 17.08 and as low as 11.16, with a median of 13.25, all within the past year.

We also note that BLMN holds a PEG ratio of 1.29. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. BLMN's industry has an average PEG of 1.99 right now. Over the past 52 weeks, BLMN's PEG has been as high as 1.75 and as low as 1.18, with a median of 1.44.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. BLMN has a P/S ratio of 0.44. This compares to its industry's average P/S of 1.02.

Finally, we should also recognize that BLMN has a P/CF ratio of 5.40. 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 17.25. Over the past year, BLMN's P/CF has been as high as 6.86 and as low as 4.72, with a median of 5.54.

These are only a few of the key metrics included in Bloomin' Brands'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, BLMN looks like an impressive value stock at the moment.


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