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Are Investors Undervaluing Tenet Healthcare (THC) Right Now?

Zacks Equity Research
Tech Data (TECD) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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.

Tenet Healthcare (THC) is a stock many investors are watching right now. THC is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 12.97. This compares to its industry's average Forward P/E of 13.25. Over the last 12 months, THC's Forward P/E has been as high as 26.28 and as low as 9.39, with a median of 14.78.

THC is also sporting a PEG ratio of 0.56. 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. THC's industry has an average PEG of 1.06 right now. THC's PEG has been as high as 2.08 and as low as 0.49, with a median of 1.15, all within the past year.

Finally, we should also recognize that THC has a P/CF ratio of 3.34. 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. THC's P/CF compares to its industry's average P/CF of 5.94. Over the past 52 weeks, THC's P/CF has been as high as 11.41 and as low as 1.83, with a median of 3.88.

These are just a handful of the figures considered in Tenet Healthcare'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 THC is an impressive value stock right now.


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