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Is Big 5 Sporting (BGFV) a Great Stock for Value Investors?
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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 Big 5 Sporting Goods Corporation (BGFV - 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, Big 5 Sporting Goods has a trailing twelve months PE ratio of 6.43, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 21.26. If we focus on the long-term PE trend, Big 5 Sporting Goods’ current PE level puts it below its midpoint of 14.34 over the past five years. Moreover, the current level stands way below the highs for the stock, suggesting that it could be a solid entry point.
Further, the stock’s PE compares favorably with the Zacks Retail - Wholesale sector’s trailing twelve months PE ratio, which stands at 30.45. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Big 5 Sporting has a forward PE ratio (price relative to this year’s earnings) of 7.3, so it is fair to expect an increase in the company’s share price in the near future.
P/S 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, Big 5 Sporting has a P/S ratio of about 0.13. This is significantly lower than the S&P 500 average, which comes in at 3.48 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Big 5 Sporting currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Big 5 Sporting a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the P/CF ratio (another great indicator of value) ratio for Big 5 Sporting is just 3.73, a level that is far lower than the industry average of 9.20. Clearly, BGFV is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Big 5 Sporting 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 Score of D and Momentum Score of C each. This gives BGFV 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 remained stable in the past 30 days. Both, the current quarter and full year consensus estimates have remained unchanged over the past month. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Big 5 Sporting Goods Corporation Price and Consensus
Given such trends, the stock has just a Zacks Rank #3 (Hold), which is why we are looking for in-line performance from the company in the near term.
Bottom Line
Big 5 Sporting is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Further, this Zacks Rank #3 company enjoys a solid Zacks Industry Rank (among top 5% of more than 250 industries), which hints at favorable broader factors.
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Is Big 5 Sporting (BGFV) a Great Stock for Value Investors?
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?
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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 Big 5 Sporting Goods Corporation (BGFV - 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, Big 5 Sporting Goods has a trailing twelve months PE ratio of 6.43, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 21.26. If we focus on the long-term PE trend, Big 5 Sporting Goods’ current PE level puts it below its midpoint of 14.34 over the past five years. Moreover, the current level stands way below the highs for the stock, suggesting that it could be a solid entry point.
Further, the stock’s PE compares favorably with the Zacks Retail - Wholesale sector’s trailing twelve months PE ratio, which stands at 30.45. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Big 5 Sporting has a forward PE ratio (price relative to this year’s earnings) of 7.3, so it is fair to expect an increase in the company’s share price in the near future.
P/S 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, Big 5 Sporting has a P/S ratio of about 0.13. This is significantly lower than the S&P 500 average, which comes in at 3.48 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Big 5 Sporting currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Big 5 Sporting a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the P/CF ratio (another great indicator of value) ratio for Big 5 Sporting is just 3.73, a level that is far lower than the industry average of 9.20. Clearly, BGFV is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Big 5 Sporting 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 Score of D and Momentum Score of C each. This gives BGFV 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 remained stable in the past 30 days. Both, the current quarter and full year consensus estimates have remained unchanged over the past month. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Big 5 Sporting Goods Corporation Price and Consensus
Big 5 Sporting Goods Corporation Price and Consensus | Big 5 Sporting Goods Corporation Quote
Given such trends, the stock has just a Zacks Rank #3 (Hold), which is why we are looking for in-line performance from the company in the near term.
Bottom Line
Big 5 Sporting is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Further, this Zacks Rank #3 company enjoys a solid Zacks Industry Rank (among top 5% of more than 250 industries), which hints at favorable broader factors.
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>