Are Investors Undervaluing Bed Bath & Beyond (BBBY) Right Now?

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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 stock to keep an eye on is Bed Bath & Beyond (BBBY). BBBY is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. BBBY has a P/S ratio of 0.31. This compares to its industry's average P/S of 0.49.

Finally, investors should note that BBBY has a P/CF ratio of 8.89. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. BBBY's current P/CF looks attractive when compared to its industry's average P/CF of 14.79. BBBY's P/CF has been as high as 8.89 and as low as -172.44, with a median of 3.13, all within the past year.

These are just a handful of the figures considered in Bed Bath & Beyond'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 BBBY is an impressive value stock right now.

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