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Should Value Investors Buy Molina (MOH) Stock?

Zacks Equity Research
International Paper (IP) possesses the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

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

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.

One stock to keep an eye on is Molina (MOH). MOH is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 11.49, which compares to its industry's average of 14.96. Over the past 52 weeks, MOH's Forward P/E has been as high as 26.16 and as low as 11.43, with a median of 15.37.

Investors should also note that MOH holds a PEG ratio of 0.92. 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 1.11. Over the past 52 weeks, MOH's PEG has been as high as 1.71 and as low as 0.91, with a median of 1.28.

Finally, investors should note that MOH has a P/CF ratio of 9.21. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. MOH's current P/CF looks attractive when compared to its industry's average P/CF of 13.61. Within the past 12 months, MOH's P/CF has been as high as 67.91 and as low as -23.30, with a median of 11.70.

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


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