Is Brinker International (EAT) a Great Value Stock Right Now?

Zacks Equity Research - finance.yahoo.com Posted 5 years ago
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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 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.

Brinker International (EAT) is a stock many investors are watching right now. EAT is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 10.88. This compares to its industry's average Forward P/E of 22.56. Over the last 12 months, EAT's Forward P/E has been as high as 13.96 and as low as 9.15, with a median of 12.06.

Investors will also notice that EAT has a PEG ratio of 1.23. 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 1.76. EAT's PEG has been as high as 1.57 and as low as 0.68, with a median of 1.20, all within the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. EAT has a P/S ratio of 0.49. This compares to its industry's average P/S of 0.97.

Finally, we should also recognize that EAT has a P/CF ratio of 5.92. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 15.46. Over the past 52 weeks, EAT's P/CF has been as high as 8.40 and as low as 5.42, with a median of 6.84.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Brinker International is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, EAT feels like a great value stock at the moment.


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