While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system’s “Value” category. Stocks with both “A” grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Tenet Healthcare (THC – Free Report) is a stock many investors are watching right now. THC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 11.30. This compares to its industry’s average Forward P/E of 11.84. Over the past year, THC’s Forward P/E has been as high as 18.48 and as low as 10.93, with a median of 14.98.
Investors should also note that THC holds a PEG ratio of 0.58. 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. THC’s PEG compares to its industry’s average PEG of 0.88. Over the past 52 weeks, THC’s PEG has been as high as 5.07 and as low as 0.56, with a median of 1.36.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock’s price with the company’s sales. This is a prefered metric because revenue can’t really be manipulated, so sales are often a truer performance indicator. THC has a P/S ratio of 0.57. This compares to its industry’s average P/S of 0.76.
Finally, investors should note that THC has a P/CF ratio of 3.10. This figure highlights a company’s operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock’s P/CF looks attractive against its industry’s average P/CF of 5.93. Over the past 52 weeks, THC’s P/CF has been as high as 7.24 and as low as 2.61, with a median of 3.94.
Value investors will likely look at more than just these metrics, but the above data helps show that Tenet Healthcare is likely undervalued currently. And when considering the strength of its earnings outlook, THC sticks out at as one of the market’s strongest value stocks.
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