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Are Investors Undervaluing BT Group (BT) Right Now?

Zacks Equity Research
Lam Research (LRCX) closed at $198.47 in the latest trading session, marking a +0.12% move from the prior day.

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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 BT Group (BT). BT 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 8.67. This compares to its industry's average Forward P/E of 12.71. Over the past year, BT's Forward P/E has been as high as 10.26 and as low as 7.36, with a median of 8.78.

Another notable valuation metric for BT is its P/B ratio of 2.03. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 2.05. Over the past year, BT's P/B has been as high as 3.08 and as low as 1.97, with a median of 2.15.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. BT has a P/S ratio of 0.93. This compares to its industry's average P/S of 1.15.

Finally, investors should note that BT has a P/CF ratio of 3.92. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. BT's current P/CF looks attractive when compared to its industry's average P/CF of 9.64. Over the past 52 weeks, BT's P/CF has been as high as 4.79 and as low as 3.65, with a median of 4.07.

These are just a handful of the figures considered in BT Group'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 BT is an impressive value stock right now.


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