Is Tenet Healthcare (THC) Stock Undervalued Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Neverthe...
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. 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.
Tenet Healthcare (THC) is a stock many investors are watching right now. THC is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 12.71 right now. For comparison, its industry sports an average P/E of 14.40. Over the past 52 weeks, THC's Forward P/E has been as high as 17.09 and as low as 7.43, with a median of 12.21.
We should also highlight that THC has a P/B ratio of 6.68. 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 15.95. Over the past 12 months, THC's P/B has been as high as 8.65 and as low as 3.62, with a median of 6.23.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. THC has a P/S ratio of 0.4. This compares to its industry's average P/S of 1.18.
Finally, investors should note that THC has a P/CF ratio of 5.81. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 8.15. Over the past year, THC's P/CF has been as high as 6.06 and as low as 2.79, with a median of 4.47.
These are only a few of the key metrics included in Tenet Healthcare's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, THC looks like an impressive value stock at the moment.
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