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Should Value Investors Buy Hologic (HOLX) Stock?

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Zacks Equity Research
·2 min read
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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.

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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 stock to keep an eye on is Hologic (HOLX). HOLX is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. HOLX has a P/S ratio of 3.91. This compares to its industry's average P/S of 7.33.

Finally, our model also underscores that HOLX has a P/CF ratio of 10.70. 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. HOLX's current P/CF looks attractive when compared to its industry's average P/CF of 24.60. Over the past year, HOLX's P/CF has been as high as 28.44 and as low as 9.97, with a median of 13.53.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Hologic is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, HOLX feels like a great value stock at the moment.


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