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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
Humana (HUM) is a stock many investors are watching right now. HUM is currently sporting a Zacks Rank #2 (Buy) and an A for Value.
Another notable valuation metric for HUM is its P/B ratio of 1.66. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 2.08. Over the past year, HUM's P/B has been as high as 2.30 and as low as 1.45, with a median of 1.82.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. HUM has a P/S ratio of 0.25. This compares to its industry's average P/S of 0.26.
These are just a handful of the figures considered in Humana's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that HUM is an impressive value stock right now.
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Humana Inc. (HUM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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