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 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 DaVita (DVA). DVA is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 10.65, while its industry has an average P/E of 18.26. DVA's Forward P/E has been as high as 15.44 and as low as 10.48, with a median of 13.17, all within the past year.
Investors should also note that DVA holds a PEG ratio of 0.83. 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. DVA's PEG compares to its industry's average PEG of 1.42. Within the past year, DVA's PEG has been as high as 1.09 and as low as 0.69, with a median of 0.87.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. DVA has a P/S ratio of 1.06. This compares to its industry's average P/S of 1.32.
These are just a handful of the figures considered in DaVita'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 DVA is an impressive value stock right now.
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DaVita Inc. (DVA): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).