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Are Investors Undervaluing Brinker International (EAT) 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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 Brinker International (EAT - Free Report) . EAT is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 10.03, while its industry has an average P/E of 25.06. EAT's Forward P/E has been as high as 13.96 and as low as 9.36, with a median of 11.77, all within the past year.

We also note that EAT holds a PEG ratio of 1.23. 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. EAT's PEG compares to its industry's average PEG of 2.13. Over the past 52 weeks, EAT's PEG has been as high as 1.57 and as low as 0.99, 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 0.47. This compares to its industry's average P/S of 0.99.

Finally, we should also recognize that EAT has a P/CF ratio of 5.16. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 18.46. Over the past year, EAT's P/CF has been as high as 8.40 and as low as 4.78, with a median of 6.40.

These are just a handful of the figures considered in Brinker International's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that EAT is an impressive value stock right now.


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