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Is BJ's Wholesale Club (BJ) Stock Undervalued 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.

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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 value investors might notice is BJ's Wholesale Club (BJ - Free Report) . BJ is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A.

BJ is also sporting a PEG ratio of 1.21. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. BJ's industry has an average PEG of 1.34 right now. Within the past year, BJ's PEG has been as high as 1.91 and as low as 1.02, with a median of 1.37.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. BJ has a P/S ratio of 0.37. This compares to its industry's average P/S of 0.6.

These are just a handful of the figures considered in BJ's Wholesale Club'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 BJ is an impressive value stock right now.


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