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Should Value Investors Buy Boyd Gaming (BYD) Stock?

Zacks Equity Research

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.

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 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 Boyd Gaming (BYD). BYD is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 15.55. This compares to its industry's average Forward P/E of 21.64. BYD's Forward P/E has been as high as 18.45 and as low as 10.59, with a median of 14.16, all within the past year.

Investors should also note that BYD holds a PEG ratio of 1.20. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. BYD's industry currently sports an average PEG of 1.85. Within the past year, BYD's PEG has been as high as 1.22 and as low as 0.60, with a median of 0.78.

Another valuation metric that we should highlight is BYD's P/B ratio of 2.70. 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 4.34. Within the past 52 weeks, BYD's P/B has been as high as 3.05 and as low as 1.89, with a median of 2.52.

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. BYD has a P/S ratio of 1.03. This compares to its industry's average P/S of 1.47.

Finally, we should also recognize that BYD has a P/CF ratio of 7.93. 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. BYD's P/CF compares to its industry's average P/CF of 16.03. Over the past year, BYD's P/CF has been as high as 10.09 and as low as 5.55, with a median of 7.71.

Value investors will likely look at more than just these metrics, but the above data helps show that Boyd Gaming is likely undervalued currently. And when considering the strength of its earnings outlook, BYD sticks out at as one of the market's strongest value stocks.


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