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Is Brinker International (EAT) Stock Undervalued Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is Brinker International (EAT - Free Report) . EAT is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 16.67 right now. For comparison, its industry sports an average P/E of 22.66. Over the past year, EAT's Forward P/E has been as high as 16.67 and as low as 8.41, with a median of 11.14.

Investors should also note that EAT holds a PEG ratio of 0.81. 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. EAT's PEG compares to its industry's average PEG of 1.95. EAT's PEG has been as high as 1.92 and as low as 0.56, with a median of 0.74, 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. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. EAT has a P/S ratio of 0.75. This compares to its industry's average P/S of 0.79.

Finally, investors should note that EAT has a P/CF ratio of 10.29. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 16.97. EAT's P/CF has been as high as 10.29 and as low as 4.34, with a median of 6.22, all within the past year.

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


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