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Should Value Investors Buy Molina (MOH) Stock?

Zacks Equity Research
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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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 stock to keep an eye on is Molina (MOH). MOH is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with a P/E ratio of 13.54, which compares to its industry's average of 14.89. Over the last 12 months, MOH's Forward P/E has been as high as 26.16 and as low as 11.43, with a median of 14.75.

MOH is also sporting a PEG ratio of 1.03. 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. MOH's PEG compares to its industry's average PEG of 1.11. Over the last 12 months, MOH's PEG has been as high as 1.71 and as low as 0.91, with a median of 1.26.

Finally, investors should note that MOH has a P/CF ratio of 11.02. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 13.65. Over the past 52 weeks, MOH's P/CF has been as high as 67.91 and as low as -23.30, with a median of 11.70.

Value investors will likely look at more than just these metrics, but the above data helps show that Molina is likely undervalued currently. And when considering the strength of its earnings outlook, MOH sticks out at as one of the market's strongest value stocks.


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