Are Investors Undervaluing Quest Diagnostics (DGX) 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. Nevertheless, we are always paying attention to...
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 company to watch right now is Quest Diagnostics (DGX). DGX is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 15.80, while its industry has an average P/E of 26.94. Over the last 12 months, DGX's Forward P/E has been as high as 17.33 and as low as 10.81, with a median of 13.
Investors should also note that DGX holds a PEG ratio of 0.60. 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. DGX's industry currently sports an average PEG of 0.95. Within the past year, DGX's PEG has been as high as 1.40 and as low as 0.41, with a median of 0.52.
Another notable valuation metric for DGX is its P/B ratio of 2.93. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 3.68. Over the past 12 months, DGX's P/B has been as high as 3.25 and as low as 2.27, with a median of 2.54.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DGX has a P/S ratio of 1.59. This compares to its industry's average P/S of 1.6.
Finally, investors should note that DGX has a P/CF ratio of 6.82. 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. DGX's current P/CF looks attractive when compared to its industry's average P/CF of 22.89. DGX's P/CF has been as high as 12.04 and as low as 6.33, with a median of 8.47, all within the past year.
These are only a few of the key metrics included in Quest Diagnostics'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, DGX looks like an impressive value stock at the moment.
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Quest Diagnostics Incorporated (DGX): Free Stock Analysis Report
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