Is Best Buy (BBY) Stock Undervalued Right Now?

Zacks Equity Research
·2-min read

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 to watch right now is Best Buy (BBY). BBY 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 15.62, which compares to its industry's average of 19.08. Over the past 52 weeks, BBY's Forward P/E has been as high as 18.83 and as low as 7.95, with a median of 14.39.

Investors should also note that BBY holds a PEG ratio of 2.02. 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. BBY's PEG compares to its industry's average PEG of 2.14. Within the past year, BBY's PEG has been as high as 2.48 and as low as 0.98, with a median of 1.72.

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


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Zacks Investment Research