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.
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 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 Molina Healthcare (MOH). MOH is currently sporting a Zacks Rank #1 (Strong Buy), as well as an A grade for Value. The stock holds a P/E ratio of 9.08, while its industry has an average P/E of 17.77. Over the past year, MOH's Forward P/E has been as high as 13.98 and as low as 6.48, with a median of 11.46.
Another notable valuation metric for MOH is its P/B ratio of 2.06. 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 stock's P/B looks solid versus its industry's average P/B of 2.94. Over the past 12 months, MOH's P/B has been as high as 4.44 and as low as 1.79, with a median of 3.71.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. MOH has a P/S ratio of 0.23. This compares to its industry's average P/S of 0.31.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Molina Healthcare is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, MOH feels like a great value stock at the moment.
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