Should Value Investors Buy Quest Diagnostics (DGX) Stock?
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.
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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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.
Quest Diagnostics (DGX) is a stock many investors are watching right now. DGX is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 14.15, while its industry has an average P/E of 21.69. Over the past year, DGX's Forward P/E has been as high as 20.60 and as low as 11.34, with a median of 15.50.
DGX is also sporting a PEG ratio of 0.65. 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. DGX's industry has an average PEG of 1.70 right now. DGX's PEG has been as high as 0.66 and as low as 0.59, with a median of 0.61, all within the past year.
Investors should also recognize that DGX has a P/B ratio of 2.23. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. DGX's current P/B looks attractive when compared to its industry's average P/B of 2.78. Over the past 12 months, DGX's P/B has been as high as 3.28 and as low as 2.20, with a median of 2.54.
Finally, investors should note that DGX has a P/CF ratio of 7.71. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 26.82. Within the past 12 months, DGX's P/CF has been as high as 9 and as low as 6.70, with a median of 7.34.
Another great Medical - Outpatient and Home Healthcare stock you could consider is RadNet (RDNT), which is a # 2 (Buy) stock with a Value Score of A.
RadNet sports a P/B ratio of 2.37 as well; this compares to its industry's price-to-book ratio of 2.78. In the past 52 weeks, RDNT's P/B has been as high as 5.42, as low as 2.14, with a median of 2.86.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Quest Diagnostics and RadNet are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, DGX and RDNT feels like a great value stock at the moment.
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Quest Diagnostics Incorporated (DGX) : Free Stock Analysis Report
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