Is Select Medical (SEM) Stock Undervalued Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company to watch right now is Select Medical (SEM). SEM is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 12.90, which compares to its industry's average of 16.85. Over the last 12 months, SEM's Forward P/E has been as high as 19.03 and as low as 8.48, with a median of 12.68.
Investors should also note that SEM holds a PEG ratio of 0.55. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SEM's PEG compares to its industry's average PEG of 1.23. Over the past 52 weeks, SEM's PEG has been as high as 1.27 and as low as 0.54, with a median of 0.82.
Another notable valuation metric for SEM is its P/B ratio of 2.41. 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 stock's P/B looks attractive against its industry's average P/B of 3.86. Within the past 52 weeks, SEM's P/B has been as high as 2.88 and as low as 2.03, with a median of 2.51.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. SEM has a P/S ratio of 0.55. This compares to its industry's average P/S of 0.59.
Finally, our model also underscores that SEM has a P/CF ratio of 8.86. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 14.93. Over the past year, SEM's P/CF has been as high as 10.10 and as low as 6.35, with a median of 8.69.
These are only a few of the key metrics included in Select Medical'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, SEM looks like an impressive value stock at the moment.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Select Medical Holdings Corporation (SEM) : Free Stock Analysis Report
