The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader 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.
One stock to keep an eye on is Select Medical (SEM). SEM is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock holds a P/E ratio of 9.56, while its industry has an average P/E of 15.47. Over the last 12 months, SEM's Forward P/E has been as high as 18.45 and as low as 9.23, with a median of 13.79.
SEM is also sporting a PEG ratio of 0.46. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. SEM's industry has an average PEG of 1.32 right now. Within the past year, SEM's PEG has been as high as 2.22 and as low as 0.38, with a median of 0.73.
Investors should also recognize that SEM has a P/B ratio of 0.8. 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 stock's P/B looks solid versus its industry's average P/B of 2.18. Over the past year, SEM's P/B has been as high as 2.70 and as low as 0.76, with a median of 1.10.
Finally, our model also underscores that SEM has a P/CF ratio of 5.13. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 12.42. Over the past year, SEM's P/CF has been as high as 10.20 and as low as 4.63, with a median of 5.47.
Value investors will likely look at more than just these metrics, but the above data helps show that Select Medical is likely undervalued currently. And when considering the strength of its earnings outlook, SEM sticks out as one of the market's strongest value stocks.
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Select Medical Holdings Corporation (SEM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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