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Should Value Investors Buy Brinker International (EAT) Stock?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 value investors might notice is Brinker International (EAT - Free Report) . EAT is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 10.14 right now. For comparison, its industry sports an average P/E of 23.66. Over the past 52 weeks, EAT's Forward P/E has been as high as 13.91 and as low as 9.10, with a median of 10.59.

Investors will also notice that EAT has a PEG ratio of 1.56. 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 2.12 right now. Within the past year, EAT's PEG has been as high as 1.85 and as low as 1.12, with a median of 1.27.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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 0.51. This compares to its industry's average P/S of 0.88.

Finally, investors should note that EAT has a P/CF ratio of 5.74. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 17.16. Within the past 12 months, EAT's P/CF has been as high as 7.52 and as low as 4.69, with a median of 5.51.

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


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