Is MEDIFAST (MED) Stock Undervalued Right Now?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 stock to keep an eye on is MEDIFAST (MED). MED is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 10.01, which compares to its industry's average of 18.11. MED's Forward P/E has been as high as 19.67 and as low as 9.39, with a median of 12.38, all within the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. MED has a P/S ratio of 1.27. This compares to its industry's average P/S of 1.29.
Finally, investors will want to recognize that MED has a P/CF ratio of 11.92. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 16.93. Over the past year, MED's P/CF has been as high as 21.49 and as low as 10.67, with a median of 13.56.
If you're looking for another solid Food - Miscellaneous value stock, take a look at TreeHouse Foods (THS). THS is a # 2 (Buy) stock with a Value score of A.
Shares of TreeHouse Foods are currently trading at a forward earnings multiple of 21.78 and a PEG ratio of 3.38 compared to its industry's P/E and PEG ratios of 18.11 and 2.41, respectively.
THS's price-to-earnings ratio has been as high as 36.12 and as low as 12.63, with a median of 19.97, while its PEG ratio has been as high as 6.53 and as low as 2.28, with a median of 3.44, all within the past year.
Additionally, TreeHouse Foods has a P/B ratio of 1.27 while its industry's price-to-book ratio sits at 2.16. For THS, this valuation metric has been as high as 1.40, as low as 0.93, with a median of 1.17 over the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that MEDIFAST and TreeHouse Foods are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, MED and THS feels like a great value stock at the moment.
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