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Are Investors Undervaluing BJ's Restaurants (BJRI) 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.

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.

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.

BJ's Restaurants (BJRI - Free Report) is a stock many investors are watching right now. BJRI is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 18.01, which compares to its industry's average of 25.05. Over the past 52 weeks, BJRI's Forward P/E has been as high as 31.76 and as low as 15.54, with a median of 20.76.

We also note that BJRI holds a PEG ratio of 1.26. 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. BJRI's industry has an average PEG of 2.19 right now. Over the past 52 weeks, BJRI's PEG has been as high as 2.08 and as low as 1.07, with a median of 1.43.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. BJRI has a P/S ratio of 0.7. This compares to its industry's average P/S of 0.89.

Finally, our model also underscores that BJRI has a P/CF ratio of 6.80. 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 stock's P/CF looks attractive against its industry's average P/CF of 18.13. Within the past 12 months, BJRI's P/CF has been as high as 12.17 and as low as 5.87, with a median of 8.52.

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

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