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Are Investors Undervaluing Brinker International (EAT) Right Now?

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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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Brinker International (EAT - Free Report) . EAT is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 10.72, while its industry has an average P/E of 24.48. EAT's Forward P/E has been as high as 13.96 and as low as 10.47, with a median of 12.06, all within the past year.

Investors will also notice that EAT has a PEG ratio of 1.21. 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. EAT's industry has an average PEG of 2.08 right now. Within the past year, EAT's PEG has been as high as 1.57 and as low as 0.99, with a median of 1.26.

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. EAT has a P/S ratio of 0.49. This compares to its industry's average P/S of 0.97.

Finally, we should also recognize that EAT has a P/CF ratio of 5.58. 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 17.88. Over the past 52 weeks, EAT's P/CF has been as high as 8.40 and as low as 5.29, with a median of 6.82.

Value investors will likely look at more than just these metrics, but the above data helps show that Brinker International is likely undervalued currently. And when considering the strength of its earnings outlook, EAT sticks out at as one of the market's strongest value stocks.


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