Should Value Investors Buy Brinker International (EAT) Stock?

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 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 Brinker International (EAT). EAT is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 13.04, while its industry has an average P/E of 22.71. Over the last 12 months, EAT's Forward P/E has been as high as 28.31 and as low as 13.04, with a median of 17.42.

We also note that EAT holds a PEG ratio of 0.85. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. EAT's PEG compares to its industry's average PEG of 1.90. Over the past 52 weeks, EAT's PEG has been as high as 1.72 and as low as 0.35, with a median of 0.52.

Finally, investors should note that EAT has a P/CF ratio of 10.75. 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. EAT's P/CF compares to its industry's average P/CF of 20.87. Over the past year, EAT's P/CF has been as high as 19.36 and as low as 9.71, with a median of 13.93.

These are only a few of the key metrics included in Brinker International's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, EAT looks like an impressive value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

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