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Should Value Investors Buy Boyd Gaming (BYD) Stock?

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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. 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 Boyd Gaming (BYD). BYD is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 15.06, which compares to its industry's average of 28.83. Over the past year, BYD's Forward P/E has been as high as 18.45 and as low as 11.42, with a median of 14.28.

We also note that BYD holds a PEG ratio of 1.16. 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. BYD's PEG compares to its industry's average PEG of 2.46. BYD's PEG has been as high as 1.35 and as low as 0.60, with a median of 0.83, all within the past year.

We should also highlight that BYD has a P/B ratio of 2.63. 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. Over the past 12 months, BYD's P/B has been as high as 3.05 and as low as 1.99, with a median of 2.55.

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. BYD has a P/S ratio of 1.01. This compares to its industry's average P/S of 1.45.

Finally, investors will want to recognize that BYD has a P/CF ratio of 7.72. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 16.03. Within the past 12 months, BYD's P/CF has been as high as 10.09 and as low as 5.98, with a median of 7.80.

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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