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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Universal Health Services (UHS) is a stock many investors are watching right now. UHS is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 8.83 right now. For comparison, its industry sports an average P/E of 11.99. 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.
Investors will also notice that UHS has 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 PEG compares to its industry's average PEG of 1.28. Over the last 12 months, UHS's PEG has been as high as 0.79 and as low as 0.48, with a median of 0.62.
Investors should also recognize that UHS has a P/B ratio of 1.73. The P/B ratio pits a stock's market value against 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 3.55. Over the past 12 months, UHS's P/B has been as high as 2.47 and as low as 1.42, with a median of 1.75.
Finally, we should also recognize 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. UHS's current P/CF looks attractive when compared to its industry's average P/CF of 8.25. UHS's P/CF has been as high as 10.90 and as low as 5.42, with a median of 6.97, all within the past year.
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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