Should Value Investors Buy Select Medical (SEM) 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.
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 Select Medical (SEM). SEM is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 10.05 right now. For comparison, its industry sports an average P/E of 16.39. Over the past 52 weeks, SEM's Forward P/E has been as high as 19.03 and as low as 8.48, with a median of 12.84.
Investors should also note that SEM holds a PEG ratio of 0.43. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SEM's PEG compares to its industry's average PEG of 1.23. Over the past 52 weeks, SEM's PEG has been as high as 1.27 and as low as 0.43, with a median of 0.82.
Another valuation metric that we should highlight is SEM's P/B ratio of 1.97. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 3.84. Within the past 52 weeks, SEM's P/B has been as high as 2.88 and as low as 1.95, with a median of 2.45.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. SEM has a P/S ratio of 0.46. This compares to its industry's average P/S of 0.6.
Finally, our model also underscores that SEM has a P/CF ratio of 7.24. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 15.06. SEM's P/CF has been as high as 10.10 and as low as 7, with a median of 8.73, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Select Medical is likely undervalued currently. And when considering the strength of its earnings outlook, SEM sticks out at as one of the market's strongest value stocks.
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Select Medical Holdings Corporation (SEM) : Free Stock Analysis Report
