Should Value Investors Buy Diversified Healthcare Trust (DHC) Stock?
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.
Diversified Healthcare Trust (DHC) is a stock many investors are watching right now. DHC is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 8.57 right now. For comparison, its industry sports an average P/E of 15.58. Over the past year, DHC's Forward P/E has been as high as 45.38 and as low as 5.77, with a median of 8.06.
Finally, investors should note that DHC has a P/CF ratio of 9.45. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 15.43. DHC's P/CF has been as high as 37.22 and as low as -238.41, with a median of -44.33, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Diversified Healthcare Trust is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, DHC feels like a great value stock at the moment.
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