Are Investors Undervaluing Brinker International (EAT) Right Now?
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.
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.
One stock to keep an eye on is Brinker International (EAT). EAT is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock has a Forward P/E ratio of 10.67. This compares to its industry's average Forward P/E of 23.04. EAT's Forward P/E has been as high as 13.42 and as low as 8.41, with a median of 10.76, all within the past year.
We also note that EAT holds a PEG ratio of 0.64. 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. EAT's PEG compares to its industry's average PEG of 1.60. Over the past 52 weeks, EAT's PEG has been as high as 1.92 and as low as 0.56, with a median of 1.46.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. EAT has a P/S ratio of 0.42. This compares to its industry's average P/S of 0.92.
Finally, investors should note that EAT has a P/CF ratio of 5.83. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. EAT's current P/CF looks attractive when compared to its industry's average P/CF of 17.26. EAT's P/CF has been as high as 7.62 and as low as 4.34, with a median of 6.41, all within the past year.
If you're looking for another solid Retail - Restaurants value stock, take a look at Potbelly (PBPB). PBPB is a # 2 (Buy) stock with a Value score of A.
Potbelly also has a P/B ratio of 28.48 compared to its industry's price-to-book ratio of -27.02. Over the past year, its P/B ratio has been as high as 178.13, as low as 22.34, with a median of 49.49.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Brinker International and Potbelly are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, EAT and PBPB feels like a great value stock at the moment.
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Brinker International, Inc. (EAT) : Free Stock Analysis Report
Potbelly Corporation (PBPB) : Free Stock Analysis Report
