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Is Best Buy (BBY) a Great Value Stock Right Now?

Zacks Equity Research
·2 min read

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is Best Buy (BBY). BBY is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 16.87. This compares to its industry's average Forward P/E of 21.03. Over the past 52 weeks, BBY's Forward P/E has been as high as 17.47 and as low as 7.95, with a median of 13.42.

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BBY is also sporting a PEG ratio of 2.07. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BBY's industry has an average PEG of 2.35 right now. Over the past 52 weeks, BBY's PEG has been as high as 2.48 and as low as 0.98, with a median of 1.61.

Value investors also use the P/S ratio. The P/S ratio is 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. BBY has a P/S ratio of 0.61. This compares to its industry's average P/S of 0.75.

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


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Zacks Investment Research