Are Investors Undervaluing British American Tobacco (BTI) Right Now?

BTI

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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company to watch right now is British American Tobacco (BTI - Free Report) . BTI is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 6.79. This compares to its industry's average Forward P/E of 9.72. BTI's Forward P/E has been as high as 9.29 and as low as 6.68, with a median of 8.09, all within the past year.

We also note that BTI holds a PEG ratio of 0.76. 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. BTI's industry currently sports an average PEG of 1.90. BTI's PEG has been as high as 0.92 and as low as 0.66, with a median of 0.77, all within the past year.

These are only a few of the key metrics included in British American Tobacco's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, BTI looks like an impressive value stock at the moment.

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