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Should Value Investors Buy Tivity Health (TVTY) Stock?

Zacks Equity Research
Cosan (CZZ) closed the most recent trading day at $14.18, moving -0.49% from the previous trading session.

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of 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.

One stock to keep an eye on is Tivity Health (TVTY). TVTY is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 11.17, which compares to its industry's average of 24.93. Over the last 12 months, TVTY's Forward P/E has been as high as 23.29 and as low as 10.12, with a median of 15.62.

We also note that TVTY holds a PEG ratio of 1.02. 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. TVTY's PEG compares to its industry's average PEG of 1.76. Within the past year, TVTY's PEG has been as high as 2.12 and as low as 0.92, with a median of 1.42.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. TVTY has a P/S ratio of 1.7. This compares to its industry's average P/S of 2.46.

Finally, investors will want to recognize that TVTY has a P/CF ratio of 11.46. 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 44.86. TVTY's P/CF has been as high as 23.12 and as low as 11.38, with a median of 17.76, all within the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Tivity Health is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TVTY feels like a great value stock at the moment.


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