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Is WellCare Health Plans (WCG) Stock Undervalued Right Now?

Zacks Equity Research
CSX (CSX) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

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.

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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 WellCare Health Plans (WCG). WCG is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

Investors will also notice that WCG has a PEG ratio of 1.18. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. WCG's industry has an average PEG of 1.26 right now. WCG's PEG has been as high as 1.77 and as low as 0.98, with a median of 1.37, all within the past year.

We should also highlight that WCG has a P/B ratio of 3.33. 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. This stock's P/B looks attractive against its industry's average P/B of 3.79. Over the past 12 months, WCG's P/B has been as high as 5.37 and as low as 2.66, with a median of 3.63.

These are only a few of the key metrics included in WellCare Health Plans'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, WCG looks like an impressive value stock at the moment.


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