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Should Value Investors Consider Barloworld (BRRAY) Stock Now?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Barloworld Ltd. (BRRAY - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Barloworld has a trailing twelve months PE ratio of 17.8.
This level compares pretty favorably with the market at large, as the PE ratio for the S&P 500 comes in at about 19.9.
If we focus on the long-term trend of the stock the current level puts Barloworld’s current PE among its highs over the observed period, with the number having been on an uptrend since end-2015.
However, the stock’s PE compares somewhat unfavorably with its industry’s trailing twelve months PE ratio, which stands at 17.7. At the very least, this indicates that the stock is slightly overvalued right now, compared to its peers.
We should also point out that Barloworld has a forward PE ratio (price relative to this year’s earnings) of just 14.2, which is lower than the current figure. So it is fair to say that a slightly more value-oriented path may be ahead for Barloworld stock in the near term too.
PS Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Barloworld has a P/S ratio of about 0.6. This is significantly lower than industry average, which comes in at 3 right now. In fact, the stock has always been relatively undervalued compared to the industry, in this respect.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Barloworld currently has a Zacks Value Style Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Barloworld an apt choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Barloworld is just 0.9, a level that is far lower than the industry average of 1.67. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, its P/B ratio (used to compare a stock's market value to its book value) stands at 1.17, lower than the industry average of 2.15. Clearly, BRRAY is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Barloworld might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of A and a Momentum score of C. This gives BRRAY a Zacks VGM score—or its overarching fundamental grade—of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been trending upwards lately. The current year has seen one estimate go higher in the past thirty days compared to none lower, while the next year estimate has seen one upward revision versus none in the opposite direction, in the same time period.
This has had a small but meaningful impact on the consensus estimate though as the current quarter consensus estimate has risen by 1.1% in the past month, while the full year estimate has increased 3.8%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Even though Barloworld has a better estimates trend, the stock has just a Zacks Rank #3 (Hold). That is why we are looking for in-line performance from the company in the near term.
Bottom Line
Barloworld is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (among bottom 31% of more than 250 industries), it is hard to get too excited about this company overall. In fact, its industry has clearly underperformed the broader market so far this year, as you can see below:
So, value investors might want to wait for the broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Should Value Investors Consider Barloworld (BRRAY) Stock Now?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Barloworld Ltd. (BRRAY - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Barloworld has a trailing twelve months PE ratio of 17.8.
This level compares pretty favorably with the market at large, as the PE ratio for the S&P 500 comes in at about 19.9.
If we focus on the long-term trend of the stock the current level puts Barloworld’s current PE among its highs over the observed period, with the number having been on an uptrend since end-2015.
However, the stock’s PE compares somewhat unfavorably with its industry’s trailing twelve months PE ratio, which stands at 17.7. At the very least, this indicates that the stock is slightly overvalued right now, compared to its peers.
We should also point out that Barloworld has a forward PE ratio (price relative to this year’s earnings) of just 14.2, which is lower than the current figure. So it is fair to say that a slightly more value-oriented path may be ahead for Barloworld stock in the near term too.
PS Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Barloworld has a P/S ratio of about 0.6. This is significantly lower than industry average, which comes in at 3 right now. In fact, the stock has always been relatively undervalued compared to the industry, in this respect.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Barloworld currently has a Zacks Value Style Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Barloworld an apt choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Barloworld is just 0.9, a level that is far lower than the industry average of 1.67. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, its P/B ratio (used to compare a stock's market value to its book value) stands at 1.17, lower than the industry average of 2.15. Clearly, BRRAY is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Barloworld might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of A and a Momentum score of C. This gives BRRAY a Zacks VGM score—or its overarching fundamental grade—of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been trending upwards lately. The current year has seen one estimate go higher in the past thirty days compared to none lower, while the next year estimate has seen one upward revision versus none in the opposite direction, in the same time period.
This has had a small but meaningful impact on the consensus estimate though as the current quarter consensus estimate has risen by 1.1% in the past month, while the full year estimate has increased 3.8%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Barloworld Ltd. Price and Consensus
Barloworld Ltd. Price and Consensus | Barloworld Ltd. Quote
Even though Barloworld has a better estimates trend, the stock has just a Zacks Rank #3 (Hold). That is why we are looking for in-line performance from the company in the near term.
Bottom Line
Barloworld is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (among bottom 31% of more than 250 industries), it is hard to get too excited about this company overall. In fact, its industry has clearly underperformed the broader market so far this year, as you can see below:
So, value investors might want to wait for the broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>