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Is Brunswick Corporation (BC) a Suitable Value Stock Now?
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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 Brunswick Corporation (BC - 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, Brunswick Corporation has a trailing twelve months PE ratio of 15.2, 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 stands at about 21.0. If we focus on the long-term PE trend, Brunswick Corporation’s current PE level puts it slightly below its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at 26.1. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Brunswick Corporation has a forward PE ratio (price relative to this year’s earnings) of just 12.9, so it is fair to say that a slightly more value-oriented path may be ahead for Brunswick Corporation 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, Brunswick Corporation has a P/S ratio of about 1.1. This is lower than the S&P 500 average, which comes in at 3.6 right now. Also, as we can see in the chart below, this is slightly below the highs for this stock in particular over the past few years.
If anything, the stock is trading somewhere around its median value for the time period from a P/S metric. This does not provide us with a conclusive direction as to the relative valuation of the stock in comparison to its historical trend.
Broad Value Outlook
In aggregate, Brunswick Corporation 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 Brunswick Corporation a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Brunswick Corporation is just 0.8, a level that is lower than the industry average of 1.2. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, its P/CF ratio (another great indicator of value) comes in at 11.5, which is far better than the industry average of 16.1. Clearly, BC is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Brunswick Corporation 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 B. This gives BC 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 been mostly trending higher. The current quarter has seen five estimates go higher in the past sixty days compared to three lower, while the full year estimate has seen twelve upward and zero downward revisions in the same time period.
As a result, the current quarter consensus estimate has risen by 6.8% in the past two months, while the full year estimate has increased 6%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This positive trend signifies bullish analyst sentiment, and its Zacks Rank #2 (Buy) indicates robust fundamentals and expectations of outperformance in the near term.
Bottom Line
Brunswick Corporation is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, a robust industry rank (among the Top 32%) and a solid Zacks Rank instills investor confidence.
However, it is hard to get too excited about this company overall as over the past two years, the industry has underperformed the broader market, as you can see below:
Despite the poor past performance of the industry, a good industry rank signals that the stock is likely to benefit from favorable broader factors in the immediate future. Add to this the positive estimate revisions and robust value metrics, and we believe that we have a strong value contender in Brunswick Corporation.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Is Brunswick Corporation (BC) a Suitable Value Stock Now?
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 Brunswick Corporation (BC - 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, Brunswick Corporation has a trailing twelve months PE ratio of 15.2, 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 stands at about 21.0. If we focus on the long-term PE trend, Brunswick Corporation’s current PE level puts it slightly below its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at 26.1. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Brunswick Corporation has a forward PE ratio (price relative to this year’s earnings) of just 12.9, so it is fair to say that a slightly more value-oriented path may be ahead for Brunswick Corporation 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, Brunswick Corporation has a P/S ratio of about 1.1. This is lower than the S&P 500 average, which comes in at 3.6 right now. Also, as we can see in the chart below, this is slightly below the highs for this stock in particular over the past few years.
If anything, the stock is trading somewhere around its median value for the time period from a P/S metric. This does not provide us with a conclusive direction as to the relative valuation of the stock in comparison to its historical trend.
Broad Value Outlook
In aggregate, Brunswick Corporation 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 Brunswick Corporation a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Brunswick Corporation is just 0.8, a level that is lower than the industry average of 1.2. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, its P/CF ratio (another great indicator of value) comes in at 11.5, which is far better than the industry average of 16.1. Clearly, BC is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Brunswick Corporation 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 B. This gives BC 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 been mostly trending higher. The current quarter has seen five estimates go higher in the past sixty days compared to three lower, while the full year estimate has seen twelve upward and zero downward revisions in the same time period.
As a result, the current quarter consensus estimate has risen by 6.8% in the past two months, while the full year estimate has increased 6%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Brunswick Corporation Price and Consensus
Brunswick Corporation Price and Consensus | Brunswick Corporation Quote
This positive trend signifies bullish analyst sentiment, and its Zacks Rank #2 (Buy) indicates robust fundamentals and expectations of outperformance in the near term.
Bottom Line
Brunswick Corporation is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, a robust industry rank (among the Top 32%) and a solid Zacks Rank instills investor confidence.
However, it is hard to get too excited about this company overall as over the past two years, the industry has underperformed the broader market, as you can see below:
Despite the poor past performance of the industry, a good industry rank signals that the stock is likely to benefit from favorable broader factors in the immediate future. Add to this the positive estimate revisions and robust value metrics, and we believe that we have a strong value contender in Brunswick Corporation.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>