Should value investors choose Brunswick (BC) stocks right now?


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 go unnoticed and are attractive buys, or offer great discounts off their fair value?

One way to find these companies is to look at several key financial metrics and ratios, many of which are crucial in the value stock picking process. Let’s put Brunswick BC stock into this equation and find out if it is a good choice for value investors right now, or if investors who subscribe to this methodology should look elsewhere for the best choices:

P / E ratio

A key metric that value investors always look at is the price-to-earnings ratio, or PE for short. It shows us how much investors are willing to pay for every dollar of profit in any given stock, and it’s 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 industry / sector average; and c) how it compares to the market as a whole.

On this front, Brunswick has a 12-month PE ratio of 11.8, as you can see in the chart below:

Image source: Zacks Investment Research

This level actually compares quite favorably with the market as a whole, as the PE for the S&P 500 is around 24.6. If we focus on the long term trend of PE, its current level of PE puts it below its midpoint over the past five years.

Zacks investment researchImage source: Zacks Investment Research

Additionally, the stock’s PE also compares favorably with its industry’s 12-month PE ratio of 68.8. At the very least, it indicates that the title is currently relatively undervalued compared to its peers.

Zacks investment researchImage source: Zacks Investment Research

It should also be noted that Brunswick has a futures PE ratio (price to earnings for this year) of just 11.9, which is above the current level. So it’s fair to expect the company’s stock price to rise in the near term.

P / S Ratio

Another key indicator to note is the price / sales ratio. This approach compares the price of a given stock to its total sales, where a lower reading is generally considered better. Some people like this value metric more than others because it looks at sales, something that is much more difficult to manipulate with accounting tricks than profits.

Currently Brunswick has a P / S ratio of around 1.4. This is below the S&P 500 average, which currently sits at 5.1. We can see from the chart below that it’s slightly above the highs of this particular stock over the past few years.

Zacks investment researchImage source: Zacks Investment Research

On the contrary, it suggests some level of undervalued trading, at least by historical standards.

Broad value outlook

Overall Brunswick currently has a value score of A which places it in the top 20% of all stocks we cover from this look. This makes Brunswick a solid choice for value investors, and other key metrics show that quite clearly as well.

For example, the P / CF ratio (another great indicator of value) stands at 13.5 (which is a bit better than the industry average of 16.4). Obviously, BC is a solid value choice from several angles.

What about the stock as a whole?

While Brunswick may be a good choice for value investors, there are many other factors to consider before investing in this name. In particular, it should be noted that the company has a Growth score of A and a Momentum score of C. This gives BC a Zacks VGM score – or its overall fundamental score – of A. (You can read more at Zacks style scores here >>)

Meanwhile, the company’s recent earnings estimates have been encouraging. The current year has seen eight estimates rise and none have fallen in the past sixty days, while that of 2022 has seen five upward revisions and two downward.

As a result, the consensus estimate for the current year and 2022 have both improved by 1.4% in the past two months. You can see the trend of the consensus estimate and recent stock price development in the chart below:

Brunswick Corporation Price and Consensus

Brunswick Corporation Price and Consensus

Brunswick Corporation Price Consensus Table | Brunswick company quote

Despite an uptrend, British Columbia holds a Zacks Rank # 3 (Hold). This indicates that analysts have misgivings about the stock in the immediate future. Thus, we are looking for online performance from the company in the short term.

Final result

Brunswick is an inspired choice for value investors, as its incredible range of statistics is hard to beat on this front. Additionally, a strong industry ranking (top 26%) further supports the stock’s growth potential. However, with a rank 3 of Zacks, it’s hard to get too excited about this business as a whole. Additionally, over the past year the industry as a whole has clearly underperformed the market as a whole, as you can see below:

Zacks investment researchImage source: Zacks Investment Research

So despite Zacks ranking 3, we believe that bullish analyst sentiment and industry support factors make this value stock a compelling choice.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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