Should Value Investors Buy Brinker International (EAT) Stock?
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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 company value investors might notice is Brinker International (EAT). EAT is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock holds a P/E ratio of 9.64, while its industry has an average P/E of 23.21. Over the past year, EAT's Forward P/E has been as high as 13.42 and as low as 8.41, with a median of 10.83.
Investors should also note that EAT holds a PEG ratio of 0.58. 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. EAT's PEG compares to its industry's average PEG of 1.62. 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 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. EAT has a P/S ratio of 0.38. This compares to its industry's average P/S of 0.85.
Finally, investors will want to recognize that EAT has a P/CF ratio of 5.22. 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. This stock's P/CF looks attractive against its industry's average P/CF of 17.36. Over the past 52 weeks, EAT's P/CF has been as high as 7.62 and as low as 4.34, with a median of 6.41.
These are just a handful of the figures considered in Brinker International'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 EAT is an impressive value stock right now.
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Brinker International, Inc. (EAT) : Free Stock Analysis Report
