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Will Big 5 Sporting Goods (BGFV) Make a Suitable Value Pick?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Big 5 Sporting Goods Corporation (BGFV - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Big 5 Sporting Goods has a trailing twelve months PE ratio of 12.84, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.19. If we focus on the stock’s long-term PE trend, the current level puts Big 5 Sporting Goods ’s current PE ratio below its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the Zacks classified Retail – Miscellaneous industry’s trailing twelve months PE ratio, which stands at 16.43. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Big 5 Sporting Goods has a forward PE ratio (price relative to this year’s earnings) of just 11.67, so it is fair to say that a slightly more value-oriented path may be ahead for Big 5 Sporting Goods stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Big 5 Sporting Goods has a P/S ratio of about 0.30. This is lower than the S&P 500 average, which comes in at 2.66 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Big 5 Sporting Goods currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Big 5 Sporting Goods a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Big 5 Sporting Goods is just 0.97, lower than the industry average of 1.12. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, BGFV is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Big 5 Sporting Goods might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘A’ and a Momentum score of ‘C’. This gives BGFV a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have seen favorable revisions. The current quarter has seen two estimates going higher in the past sixty days compared to none lower, while the full year estimate has seen four upward and no downward movement in the same time period.
As a result, the current quarter consensus estimate has risen by 5.5% in the past two months and the full year estimate has increased by 8.1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Big 5 Sporting Goods Corporation Price and Consensus
This bullish trend is why the stock boasts a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term
Bottom Line
Big 5 Sporting Goods is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a strong industry rank (Top 18% out of more than 250 industries) further strengthens its growth potential.
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more.
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Will Big 5 Sporting Goods (BGFV) Make a Suitable Value Pick?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Big 5 Sporting Goods Corporation (BGFV - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Big 5 Sporting Goods has a trailing twelve months PE ratio of 12.84, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.19. If we focus on the stock’s long-term PE trend, the current level puts Big 5 Sporting Goods ’s current PE ratio below its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the Zacks classified Retail – Miscellaneous industry’s trailing twelve months PE ratio, which stands at 16.43. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Big 5 Sporting Goods has a forward PE ratio (price relative to this year’s earnings) of just 11.67, so it is fair to say that a slightly more value-oriented path may be ahead for Big 5 Sporting Goods stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Big 5 Sporting Goods has a P/S ratio of about 0.30. This is lower than the S&P 500 average, which comes in at 2.66 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Big 5 Sporting Goods currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Big 5 Sporting Goods a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Big 5 Sporting Goods is just 0.97, lower than the industry average of 1.12. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, BGFV is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Big 5 Sporting Goods might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘A’ and a Momentum score of ‘C’. This gives BGFV a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have seen favorable revisions. The current quarter has seen two estimates going higher in the past sixty days compared to none lower, while the full year estimate has seen four upward and no downward movement in the same time period.
As a result, the current quarter consensus estimate has risen by 5.5% in the past two months and the full year estimate has increased by 8.1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Big 5 Sporting Goods Corporation Price and Consensus
Big 5 Sporting Goods Corporation Price and Consensus | Big 5 Sporting Goods Corporation Quote
This bullish trend is why the stock boasts a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term
Bottom Line
Big 5 Sporting Goods is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a strong industry rank (Top 18% out of more than 250 industries) further strengthens its growth potential.
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more.
Click here for a peek at this private information >>