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Are Investors Undervaluing Barclays (BCS) 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.

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 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 company value investors might notice is Barclays (BCS - Free Report) . BCS is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 5.07 right now. For comparison, its industry sports an average P/E of 7.57. Over the past year, BCS's Forward P/E has been as high as 8.20 and as low as 4.75, with a median of 5.87.

We also note that BCS holds a PEG ratio of 0.17. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. BCS's industry currently sports an average PEG of 0.45. BCS's PEG has been as high as 0.25 and as low as 0.14, with a median of 0.18, all within the past year.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. BCS has a P/S ratio of 1.11. This compares to its industry's average P/S of 1.31.

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


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