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Is Bristol-Myers (BMY) 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 Bristol-Myers Squibb Company (BMY - 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, Bristol-Myers has a trailing twelve months PE ratio of 14.4, 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 17.5. If we focus on the long-term PE trend, Bristol-Myers’ current PE level puts it below its midpoint over the past five years. Moreover, the current level is fairly below the highs for this stock, suggesting it might be a good entry point.
Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at nearly 16.0. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Bristol-Myers has a forward PE ratio (price relative to this year’s earnings) of just 13.9, so it is fair to say that a slightly more value-oriented path may be ahead for Bristol-Myers stock in the near term too.
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, Bristol-Myers has a P/S ratio of about 4.0. While this is a bit higher than the S&P 500 average, which comes in at 3.1 right now, this is well below the highs for this stock in particular over the past few years.
If anything, BMY is toward the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Bristol-Myers currently has a Zacks Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Bristol-Myers a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Bristol-Myers is 1.5, a level that is lower than the industry average of 2.1. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, BMY is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Bristol-Myers 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 grade of B and a Momentum score of C. This gives BMY 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 been quite encouraging. The current quarter has seen four estimates go higher in the past sixty days compared to none lower, while the full year estimate has seen seven upward and no downward revisions in the same time period.
As a result, the current quarter consensus estimate has risen by 6.3% in the past two months, while the full year estimate has increased 6.1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This bullish trend is why the stock boasts a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term.
Bottom Line
Bristol-Myers is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Boasting a good industry rank (among the top 33%) and a top Zacks Rank, the company deserves attention right now. In fact, over the past two years, the industry has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Is Bristol-Myers (BMY) 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?
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 Bristol-Myers Squibb Company (BMY - 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, Bristol-Myers has a trailing twelve months PE ratio of 14.4, 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 17.5. If we focus on the long-term PE trend, Bristol-Myers’ current PE level puts it below its midpoint over the past five years. Moreover, the current level is fairly below the highs for this stock, suggesting it might be a good entry point.
Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at nearly 16.0. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Bristol-Myers has a forward PE ratio (price relative to this year’s earnings) of just 13.9, so it is fair to say that a slightly more value-oriented path may be ahead for Bristol-Myers stock in the near term too.
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, Bristol-Myers has a P/S ratio of about 4.0. While this is a bit higher than the S&P 500 average, which comes in at 3.1 right now, this is well below the highs for this stock in particular over the past few years.
If anything, BMY is toward the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Bristol-Myers currently has a Zacks Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Bristol-Myers a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Bristol-Myers is 1.5, a level that is lower than the industry average of 2.1. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, BMY is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Bristol-Myers 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 grade of B and a Momentum score of C. This gives BMY 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 been quite encouraging. The current quarter has seen four estimates go higher in the past sixty days compared to none lower, while the full year estimate has seen seven upward and no downward revisions in the same time period.
As a result, the current quarter consensus estimate has risen by 6.3% in the past two months, while the full year estimate has increased 6.1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Bristol-Myers Squibb Company Price and Consensus
Bristol-Myers Squibb Company Price and Consensus | Bristol-Myers Squibb Company Quote
This bullish trend is why the stock boasts a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term.
Bottom Line
Bristol-Myers is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Boasting a good industry rank (among the top 33%) and a top Zacks Rank, the company deserves attention right now. In fact, over the past two years, the industry has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>