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Are Investors Undervaluing Molina (MOH) Right Now?

Zacks Equity Research

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. 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.

Molina (MOH) is a stock many investors are watching right now. MOH is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 12.17 right now. For comparison, its industry sports an average P/E of 15.16. Over the past year, MOH's Forward P/E has been as high as 26.16 and as low as 11.43, with a median of 14.35.

Investors should also note that MOH holds a PEG ratio of 0.92. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MOH's PEG compares to its industry's average PEG of 1.13. Over the last 12 months, MOH's PEG has been as high as 1.71 and as low as 0.90, with a median of 1.17.

Finally, investors will want to recognize that MOH has a P/CF ratio of 10.04. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 13.99. Within the past 12 months, MOH's P/CF has been as high as 67.91 and as low as 8.43, with a median of 11.07.

These are only a few of the key metrics included in Molina'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, MOH looks like an impressive value stock at the moment.


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