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.
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.
One company to watch right now is Tenet Healthcare (THC). THC is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 9.65, while its industry has an average P/E of 11.79. THC's Forward P/E has been as high as 18.48 and as low as 8.81, with a median of 14.11, all within the past year.
Investors should also note that THC holds a PEG ratio of 0.88. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. THC's industry has an average PEG of 1.07 right now. Over the past 52 weeks, THC's PEG has been as high as 3.73 and as low as 0.55, with a median of 0.82.
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. THC has a P/S ratio of 0.57. This compares to its industry's average P/S of 0.65.
Finally, investors should note that THC has a P/CF ratio of 2.87. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. THC's P/CF compares to its industry's average P/CF of 6.18. Over the past 52 weeks, THC's P/CF has been as high as 4.55 and as low as 2.62, with a median of 3.61.
Value investors will likely look at more than just these metrics, but the above data helps show that Tenet Healthcare is likely undervalued currently. And when considering the strength of its earnings outlook, THC sticks out at as one of the market's strongest value stocks.
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Tenet Healthcare Corporation (THC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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