Should Value Investors Buy Molina Healthcare (MOH) Stock?
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Molina Healthcare (MOH) is a stock many investors are watching right now. MOH is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 15.49, which compares to its industry's average of 16.91. Over the past 52 weeks, 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 1.09. 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. MOH's industry currently sports an average PEG of 1.27. Over the past 52 weeks, MOH's PEG has been as high as 1.12 and as low as 0.65, with a median of 0.97.
Select Medical (SEM) may be another strong Medical - HMOs stock to add to your shortlist. SEM is a # 2 (Buy) stock with a Value grade of A.
Select Medical is currently trading with a Forward P/E ratio of 10.21 while its PEG ratio sits at 0.44. Both of the company's metrics compare favorably to its industry's average P/E of 16.91 and average PEG ratio of 1.27.
Over the last 12 months, SEM's P/E has been as high as 19.03, as low as 8.48, with a median of 12.84, and its PEG ratio has been as high as 1.27, as low as 0.43, with a median of 0.82.
Additionally, Select Medical has a P/B ratio of 1.99 while its industry's price-to-book ratio sits at 3.95. For SEM, this valuation metric has been as high as 2.88, as low as 1.95, 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
