Is Quest Diagnostics (DGX) a Great Value Stock 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...
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 company value investors might notice is Quest Diagnostics (DGX). DGX is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 16.38, which compares to its industry's average of 27.66. 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 will also notice that DGX has a PEG ratio of 0.62. 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. DGX's industry has an average PEG of 0.98 right now. DGX's PEG has been as high as 1.40 and as low as 0.41, with a median of 0.52, all within the past year.
Investors should also recognize that DGX has a P/B ratio of 2.78. The P/B ratio pits a stock's market value against 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 3.82. Over the past year, DGX's P/B has been as high as 3.25 and as low as 2.27, with a median of 2.56.
Finally, investors will want to recognize that DGX has a P/CF ratio of 7.09. 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. DGX's P/CF compares to its industry's average P/CF of 23.76. Over the past 52 weeks, DGX's P/CF has been as high as 12.10 and as low as 6.36, with a median of 8.18.
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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