Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore 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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 to watch right now is Centene (CNC). CNC is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 7.2, while its industry has an average P/E of 12.03. Over the past year, CNC's Forward P/E has been as high as 11.12 and as low as 7.09, with a median of 8.55.
Investors will also notice that CNC has a PEG ratio of 0.63. 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. CNC's PEG compares to its industry's average PEG of 1.12. Over the past 52 weeks, CNC's PEG has been as high as 1.02 and as low as 0.62, with a median of 0.79.
Another valuation metric that we should highlight is CNC's P/B ratio of 0.96. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. CNC's current P/B looks attractive when compared to its industry's average P/B of 2.22. Within the past 52 weeks, CNC's P/B has been as high as 1.54 and as low as 0.95, with a median of 1.13.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CNC has a P/S ratio of 0.17. This compares to its industry's average P/S of 0.35.
Finally, our model also underscores that CNC has a P/CF ratio of 5.75. 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. CNC's current P/CF looks attractive when compared to its industry's average P/CF of 9.30. CNC's P/CF has been as high as 10.44 and as low as 5.66, with a median of 7.06, all within the past year.
These are just a handful of the figures considered in Centene's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that CNC is an impressive value stock right now.
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Centene Corporation (CNC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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