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Is RadNet (RDNT) Stock Undervalued Right Now?

Zacks Equity Research
RenaissanceRe (RNR) is at a 52-week high, but can investors hope for more gains in the future? We take a look at the company's fundamentals for clues.

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.

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 value investors might notice is RadNet (RDNT). RDNT is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. RDNT has a P/S ratio of 0.79. This compares to its industry's average P/S of 0.97.

Finally, investors should note that RDNT has a P/CF ratio of 9.71. 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. RDNT's current P/CF looks attractive when compared to its industry's average P/CF of 15.54. Over the past year, RDNT's P/CF has been as high as 11.36 and as low as 7, with a median of 9.78.

These are only a few of the key metrics included in RadNet'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, RDNT looks like an impressive value stock at the moment.


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