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Are Investors Undervaluing Big Lots (BIG) Right Now?

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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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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.

Big Lots (BIG - Free Report) is a stock many investors are watching right now. BIG is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

BIG is also sporting a PEG ratio of 1.18. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. BIG's PEG compares to its industry's average PEG of 2.84. Within the past year, BIG's PEG has been as high as 1.57 and as low as 0.50, with a median of 0.99.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. BIG has a P/S ratio of 0.32. This compares to its industry's average P/S of 0.95.

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


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