Are Investors Undervaluing Tenet Healthcare (THC) Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 Tenet Healthcare (THC). THC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 12.82. This compares to its industry's average Forward P/E of 13.55. Over the last 12 months, THC's Forward P/E has been as high as 26.28 and as low as 9.39, with a median of 15.10.
THC is also sporting a PEG ratio of 0.55. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. THC's PEG compares to its industry's average PEG of 0.93. Over the past 52 weeks, THC's PEG has been as high as 2.08 and as low as 0.49, with a median of 1.22.
Finally, our model also underscores that THC has a P/CF ratio of 3.19. 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 P/CF compares to its industry's average P/CF of 5.96. Over the past 52 weeks, THC's P/CF has been as high as 12.07 and as low as 1.83, with a median of 7.12.
Value investors will likely look at more than just these metrics, but the above data helps show that Tenet Healthcare is likely undervalued currently. And when considering the strength of its earnings outlook, THC sticks out at as one of the market's strongest value stocks.
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