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.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 company to watch right now is DaVita (DVA). DVA is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 10.66, which compares to its industry's average of 19.38. Over the past 52 weeks, DVA's Forward P/E has been as high as 15.44 and as low as 10.48, with a median of 13.19.
Investors should also note that DVA holds a PEG ratio of 0.83. 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. DVA's industry currently sports an average PEG of 2.04. Over the last 12 months, DVA's PEG has been as high as 1.09 and as low as 0.69, with a median of 0.87.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DVA has a P/S ratio of 0.71. This compares to its industry's average P/S of 1.55.
These figures are just a handful of the metrics value investors tend to look at, but they help show that DaVita is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, DVA feels like a great value stock at the moment.
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DaVita Inc. (DVA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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