Is Best Buy (BBY) Stock Undervalued Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Neverthe...
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 Best Buy (BBY). BBY 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 11.40, while its industry has an average P/E of 19.20. Over the past 52 weeks, BBY's Forward P/E has been as high as 16.87 and as low as 10.83, with a median of 14.56.
BBY is also sporting a PEG ratio of 1.77. 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. BBY's PEG compares to its industry's average PEG of 2.34. BBY's PEG has been as high as 2.33 and as low as 1.26, with a median of 1.59, all within the past year.
Another notable valuation metric for BBY is its P/B ratio of 6.25. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 11. Over the past 12 months, BBY's P/B has been as high as 8.28 and as low as 5.55, with a median of 6.73.
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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. BBY has a P/S ratio of 0.51. This compares to its industry's average P/S of 1.49.
Finally, we should also recognize that BBY has a P/CF ratio of 8.21. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 10.85. Over the past year, BBY's P/CF has been as high as 12.91 and as low as 7.81, with a median of 10.61.
These are only a few of the key metrics included in Best Buy'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, BBY looks like an impressive value stock at the moment.
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Best Buy Co., Inc. (BBY): Free Stock Analysis Report
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