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.
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.
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.
One company value investors might notice is Select Medical (SEM). SEM is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value.
Investors should also recognize that SEM has a P/B ratio of 3.39. 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 stock's P/B looks solid versus its industry's average P/B of 3.62. Over the past 12 months, SEM's P/B has been as high as 3.44 and as low as 1.92, with a median of 2.24.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SEM has a P/S ratio of 0.57. This compares to its industry's average P/S of 0.58.
Finally, investors should note that SEM has a P/CF ratio of 7.98. 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 stock's P/CF looks attractive against its industry's average P/CF of 14.23. SEM's P/CF has been as high as 8.09 and as low as 4.68, with a median of 5.63, all within the past year.
These are only a few of the key metrics included in Select Medical'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, SEM looks like an impressive value stock at the moment.
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Select Medical Holdings Corporation (SEM) : Free Stock Analysis Report
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