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, 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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 value investors might notice is Universal Health Services (UHS). UHS is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 8.83, while its industry has an average P/E of 10.18. Over the past year, UHS's Forward P/E has been as high as 14.18 and as low as 7.60, with a median of 9.66.
We also note that UHS holds a PEG ratio of 0.74. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. UHS's industry has an average PEG of 1.08 right now. Over the past 52 weeks, UHS's PEG has been as high as 0.79 and as low as 0.48, with a median of 0.62.
We should also highlight that UHS has a P/B ratio of 1.73. 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 attractive against its industry's average P/B of 2.97. Within the past 52 weeks, UHS's P/B has been as high as 2.47 and as low as 1.42, with a median of 1.75.
Finally, our model also underscores that UHS has a P/CF ratio of 6.60. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 6.91. Over the past 52 weeks, UHS's P/CF has been as high as 10.90 and as low as 5.42, with a median of 6.97.
These are only a few of the key metrics included in Universal Health Services's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, UHS looks like an impressive value stock at the moment.
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Universal Health Services, Inc. (UHS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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