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Is Quest Diagnostics (DGX) a Great Value Stock Right Now?

Zacks Equity Research

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.

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.

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 Quest Diagnostics (DGX). DGX is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 15.53, while its industry has an average P/E of 17.62. Over the last 12 months, DGX's Forward P/E has been as high as 15.71 and as low as 12.10, with a median of 14.40.

Another notable valuation metric for DGX is its P/B ratio of 2.55. The P/B ratio is used to compare a stock's market value with 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 2.98. Over the past 12 months, DGX's P/B has been as high as 2.81 and as low as 2.02, with a median of 2.42.

Finally, investors should note that DGX has a P/CF ratio of 13.48. 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 21.99. DGX's P/CF has been as high as 13.62 and as low as 9.52, with a median of 11.97, all within the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Quest Diagnostics is likely undervalued currently. And when considering the strength of its earnings outlook, DGX sticks out at as one of the market's strongest value stocks.


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