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Is Brother Industries (BRTHY) Stock Undervalued Right Now?

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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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

Brother Industries (BRTHY - Free Report) is a stock many investors are watching right now. BRTHY is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 13.47. This compares to its industry's average Forward P/E of 16.55. Over the past year, BRTHY's Forward P/E has been as high as 15.73 and as low as 11.15, with a median of 13.03.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. BRTHY has a P/S ratio of 0.9. This compares to its industry's average P/S of 1.01.

Finally, our model also underscores that BRTHY has a P/CF ratio of 9.74. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 10.72. Over the past year, BRTHY's P/CF has been as high as 10.01 and as low as 6.36, with a median of 8.67.

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


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