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.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company to watch right now is Tenet Healthcare (THC). THC is currently sporting a Zacks Rank #1 (Strong Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 10.71, which compares to its industry's average of 12.50. Over the past year, THC's Forward P/E has been as high as 15.40 and as low as 8.81, with a median of 12.37.
We also note that THC holds a PEG ratio of 0.73. 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 industry currently sports an average PEG of 1.18. THC's PEG has been as high as 1.30 and as low as 0.55, with a median of 0.82, all within the past year.
Finally, we should also recognize that THC has a P/CF ratio of 6.45. 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. THC's current P/CF looks attractive when compared to its industry's average P/CF of 7.15. Within the past 12 months, THC's P/CF has been as high as 7.19 and as low as 2.83, with a median of 4.06.
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 as one of the market's strongest value stocks.
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Tenet Healthcare Corporation (THC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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