Is Humana (HUM) Stock Undervalued Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of 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 Humana (HUM). HUM is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 17.49 right now. For comparison, its industry sports an average P/E of 18.75. Over the last 12 months, HUM's Forward P/E has been as high as 22.63 and as low as 15.20, with a median of 17.64.
Investors should also note that HUM holds a PEG ratio of 1.24. 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. HUM's PEG compares to its industry's average PEG of 1.31. Within the past year, HUM's PEG has been as high as 1.68 and as low as 1.13, with a median of 1.31.
Another valuation metric that we should highlight is HUM's P/B ratio of 3.77. 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 company's current P/B looks solid when compared to its industry's average P/B of 4.43. Over the past 12 months, HUM's P/B has been as high as 4.08 and as low as 2.90, with a median of 3.56.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. HUM has a P/S ratio of 0.68. This compares to its industry's average P/S of 0.75.
Finally, we should also recognize that HUM has a P/CF ratio of 15.38. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 19.02. Over the past 52 weeks, HUM's P/CF has been as high as 19.41 and as low as 12.81, with a median of 15.62.
Another great Medical - HMOs stock you could consider is Molina Healthcare (MOH), which is a # 2 (Buy) stock with a Value Score of A.
Shares of Molina Healthcare currently holds a Forward P/E ratio of 14.66, and its PEG ratio is 0.89. In comparison, its industry sports average P/E and PEG ratios of 18.75 and 1.31.
Over the last 12 months, MOH's P/E has been as high as 23.62, as low as 13.75, with a median of 17.41, and its PEG ratio has been as high as 1.12, as low as 0.74, with a median of 0.97.
Additionally, Molina Healthcare has a P/B ratio of 5.61 while its industry's price-to-book ratio sits at 4.43. For MOH, this valuation metric has been as high as 7.63, as low as 5.29, with a median of 6.63 over the past year.
These are only a few of the key metrics included in Humana and Molina Healthcare strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, HUM and MOH look like an impressive value stock at the moment.
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