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Are Investors Undervaluing Tenet Healthcare (THC) Right Now?

Zacks Equity Research

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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is Tenet Healthcare (THC). THC is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock holds a P/E ratio of 12.02, while its industry has an average P/E of 14.48. Over the past year, THC's Forward P/E has been as high as 14.79 and as low as 7.03, with a median of 9.60.

Investors should also note that THC holds a PEG ratio of 0.64. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. THC's industry has an average PEG of 1.20 right now. Within the past year, THC's PEG has been as high as 0.86 and as low as 0.32, with a median of 0.55.

Finally, our model also underscores that THC has a P/CF ratio of 5.67. 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. THC's current P/CF looks attractive when compared to its industry's average P/CF of 6.01. THC's P/CF has been as high as 6.42 and as low as 2.15, with a median of 3.06, all within the past year.

These are just a handful of the figures considered in Tenet Healthcare's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that THC is an impressive value stock right now.


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