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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is BJ's Restaurants (BJRI). BJRI is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A. The stock has a Forward P/E ratio of 16.36. This compares to its industry's average Forward P/E of 25.00. Over the last 12 months, BJRI's Forward P/E has been as high as 28.43 and as low as 15.81, with a median of 22.34.
We also note that BJRI holds a PEG ratio of 1.17. 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. BJRI's industry has an average PEG of 2.09 right now. BJRI's PEG has been as high as 2.03 and as low as 1.13, with a median of 1.60, all within the past year.
Value investors also use the P/S ratio. The P/S ratio 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. BJRI has a P/S ratio of 0.56. This compares to its industry's average P/S of 0.79.
Finally, our model also underscores that BJRI has a P/CF ratio of 8.01. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. BJRI's P/CF compares to its industry's average P/CF of 23.09. Within the past 12 months, BJRI's P/CF has been as high as 11.18 and as low as 6.72, with a median of 8.50.
These figures are just a handful of the metrics value investors tend to look at, but they help show that BJ's Restaurants is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, BJRI feels like a great value stock at the moment.
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BJ's Restaurants, Inc. (BJRI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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