Should Value Investors Buy Labcorp (LH) Stock?
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 latest value, growth, and momentum trends to underscore strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company to watch right now is Labcorp (LH). LH 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 15.01 right now. For comparison, its industry sports an average P/E of 16.19. Over the past 52 weeks, LH's Forward P/E has been as high as 15.79 and as low as 12.57, with a median of 14.45.
We also note that LH holds a PEG ratio of 1.53. 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. LH's industry currently sports an average PEG of 1.73. Within the past year, LH's PEG has been as high as 1.88 and as low as 1.37, with a median of 1.62.
Another notable valuation metric for LH is its P/B ratio of 2.51. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. LH's current P/B looks attractive when compared to its industry's average P/B of 4.54. LH's P/B has been as high as 2.67 and as low as 2.04, with a median of 2.36, over the past year.
Finally, investors should note that LH has a P/CF ratio of 15.12. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 17.51. Over the past year, LH's P/CF has been as high as 19.65 and as low as 12.90, with a median of 17.12.
Value investors will likely look at more than just these metrics, but the above data helps show that Labcorp is likely undervalued currently. And when considering the strength of its earnings outlook, LH sticks out at as one of the market's strongest value stocks.
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