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 DaVita (DVA). DVA is currently sporting a Zacks Rank #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 10.65 right now. For comparison, its industry sports an average P/E of 17.95. DVA's Forward P/E has been as high as 15.44 and as low as 10.48, with a median of 13.17, all within the past year.
Investors should also note that DVA holds a PEG ratio of 0.83. 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. DVA's industry has an average PEG of 1.84 right now. Over the past 52 weeks, 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 frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. DVA has a P/S ratio of 0.74. This compares to its industry's average P/S of 1.45.
Value investors will likely look at more than just these metrics, but the above data helps show that DaVita is likely undervalued currently. And when considering the strength of its earnings outlook, DVA sticks out as one of the market's strongest value stocks.
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DaVita Inc. (DVA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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