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Is Quest Diagnostics (DGX) Stock Undervalued Right Now?

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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.

One company to watch right now is Quest Diagnostics (DGX). DGX is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 15.81, which compares to its industry's average of 24.83. DGX's Forward P/E has been as high as 20.60 and as low as 11.34, with a median of 15.76, all within the past year.

We also note that DGX holds a PEG ratio of 0.65. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. DGX's industry currently sports an average PEG of 1.62. Over the past 52 weeks, DGX's PEG has been as high as 0.66 and as low as 0.59, with a median of 0.62.

Investors should also recognize that DGX has a P/B ratio of 2.53. 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 company's current P/B looks solid when compared to its industry's average P/B of 3.08. Within the past 52 weeks, DGX's P/B has been as high as 3.28 and as low as 2.32, with a median of 2.63.

Finally, our model also underscores that DGX has a P/CF ratio of 8.75. 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. DGX's P/CF compares to its industry's average P/CF of 31.70. Within the past 12 months, DGX's P/CF has been as high as 9 and as low as 6.70, with a median of 7.24.

Investors could also keep in mind RadNet (RDNT), an Medical - Outpatient and Home Healthcare stock with a Zacks Rank of # 2 (Buy) and Value grade of A.

Additionally, RadNet has a P/B ratio of 2.81 while its industry's price-to-book ratio sits at 3.08. For RDNT, this valuation metric has been as high as 6.72, as low as 2.24, with a median of 3.79 over the past year.

These are just a handful of the figures considered in Quest Diagnostics and RadNet'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 DGX and RDNT is an impressive value stock right now.

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Quest Diagnostics Incorporated (DGX) : Free Stock Analysis Report
RadNet, Inc. (RDNT) : Free Stock Analysis Report
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