Should Value Investors Buy Molina Healthcare (MOH) Stock?
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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader 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 stock to keep an eye on is Molina Healthcare (MOH). MOH is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 14.60, which compares to its industry's average of 15.89. Over the past year, MOH's Forward P/E has been as high as 18.76 and as low as 12.61, with a median of 14.30.
Investors should also note that MOH holds a PEG ratio of 1.03. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. MOH's industry has an average PEG of 1.20 right now. Over the last 12 months, MOH's PEG has been as high as 1.12 and as low as 0.65, with a median of 0.97.
Investors could also keep in mind Select Medical (SEM), an Medical - HMOs stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Select Medical is currently trading with a Forward P/E ratio of 11.31 while its PEG ratio sits at 0.48. Both of the company's metrics compare favorably to its industry's average P/E of 15.89 and average PEG ratio of 1.20.
SEM's Forward P/E has been as high as 19.03 and as low as 8.48, with a median of 12.84. During the same time period, its PEG ratio has been as high as 1.27, as low as 0.48, with a median of 0.82.
Additionally, Select Medical has a P/B ratio of 2.18 while its industry's price-to-book ratio sits at 3.69. For SEM, this valuation metric has been as high as 2.88, as low as 2.03, with a median of 2.45 over the past year.
These are just a handful of the figures considered in Molina Healthcare and Select Medical'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 MOH and SEM is an impressive value stock right now.
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Molina Healthcare, Inc (MOH) : Free Stock Analysis Report
Select Medical Holdings Corporation (SEM) : Free Stock Analysis Report
