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Should Value Investors Buy MEDIFAST (MED) Stock?

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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.

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 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.

MEDIFAST (MED - Free Report) is a stock many investors are watching right now. MED is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 9.96. This compares to its industry's average Forward P/E of 18.63. Over the last 12 months, MED's Forward P/E has been as high as 23.41 and as low as 9.39, with a median of 12.87.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. MED has a P/S ratio of 1.24. This compares to its industry's average P/S of 1.28.

Finally, investors will want to recognize that MED has a P/CF ratio of 11.33. 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. MED's current P/CF looks attractive when compared to its industry's average P/CF of 17.34. Within the past 12 months, MED's P/CF has been as high as 29.61 and as low as 10.67, with a median of 14.39.

Investors could also keep in mind Tate & Lyle , an Food - Miscellaneous stock with a Zacks Rank of # 2 (Buy) and Value grade of A.

Tate & Lyle sports a P/B ratio of 2.10 as well; this compares to its industry's price-to-book ratio of 2.13. In the past 52 weeks, TATYD's P/B has been as high as 2.83, as low as 2.02, with a median of 2.39.

These figures are just a handful of the metrics value investors tend to look at, but they help show that MEDIFAST and Tate & Lyle are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, MED and TATYD feels like a great value stock at the moment.


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