Many investors like to look for value in stocks, but this can be very tough to define. There is great debate regarding which metrics are the best to focus on in this regard, and which are not really quality indicators of future performance. Fortunately, with our new style score system we have identified the key statistics to pay close attention to and thus which stocks might be the best for value investors in the near term.
This method discovered several great candidates for value-oriented investors, but today let’s focus on Magellan Health, Inc. as this stock is looking especially impressive right now. And while there are numerous reasons why this is the case, we have highlighted three of the most vital reasons for MGLN’s status as a solid value stock below:
PEG Ratio for MGLN
While earnings are definitely important, it is vital to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio as this metric looks to show investors how much they are paying for each unit of earnings growth.
MGLN manages to impress on this front as well, as the company’s PEG is just 1.09, suggesting that Magellan is trading as a relative bargain right now. This is particularly the case when you compare this PEG to the industry, as the broader segment has an average PEG of 1.39 in comparison.
Price to Forward Sales for Magellan
One of the most underrated ratios for value investors is the price/forward sales metric. This ratio shows investors how much they are paying for each dollar of revenues generated. In other words, a lower number is better here while a price to sales ratio of 1 means that you are paying one dollar for each dollar in sales.
With a P/S ratio of 0.34, MGLN investors are paying 34 cents in stock price for each dollar of revenue generated by the company. Compare this to the industry average of 0.5, and it is safe to say that MGLN is undervalued compared to many of its peers on this important metric.
MGLN Earnings Estimate Revisions Moving in the Right Direction
The solid value ratios outlined in the preceding paragraphs might be enough for some investors, but we should also note that the earnings estimate revisions have been trending in a positive direction as well. Analysts who follow MGLN stock have been raising their estimates for the company lately, meaning that the EPS picture is looking a bit more favorably for Magellan now.
Over the past 30 days, 4 earnings estimates have gone higher compared to none lower for the full year, while we are also seeing that 4 estimate has move upwards with no downward revision for the next year time frame too. These revisions have helped to boost the consensus estimate as 30 days ago MGLN was expected to post earnings of $2.38 per share for the full year though today it looks to have EPS of $3.15 for the full year.
Bottom Line
For the reasons detailed above, investors shouldn’t be surprised to read that we have MGLN as a stock with a Value Score of ‘A’ and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
So if you are a value investor, definitely keep MGLN on your short list as this looks to be a stock that is very well-positioned for gains in the near term.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
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Is Magellan an Incredible Value Stock? 3 Reasons Why MGLN Will Be Tough to Beat
Many investors like to look for value in stocks, but this can be very tough to define. There is great debate regarding which metrics are the best to focus on in this regard, and which are not really quality indicators of future performance. Fortunately, with our new style score system we have identified the key statistics to pay close attention to and thus which stocks might be the best for value investors in the near term.
This method discovered several great candidates for value-oriented investors, but today let’s focus on Magellan Health, Inc. as this stock is looking especially impressive right now. And while there are numerous reasons why this is the case, we have highlighted three of the most vital reasons for MGLN’s status as a solid value stock below:
PEG Ratio for MGLN
While earnings are definitely important, it is vital to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio as this metric looks to show investors how much they are paying for each unit of earnings growth.
MGLN manages to impress on this front as well, as the company’s PEG is just 1.09, suggesting that Magellan is trading as a relative bargain right now. This is particularly the case when you compare this PEG to the industry, as the broader segment has an average PEG of 1.39 in comparison.
Price to Forward Sales for Magellan
One of the most underrated ratios for value investors is the price/forward sales metric. This ratio shows investors how much they are paying for each dollar of revenues generated. In other words, a lower number is better here while a price to sales ratio of 1 means that you are paying one dollar for each dollar in sales.
With a P/S ratio of 0.34, MGLN investors are paying 34 cents in stock price for each dollar of revenue generated by the company. Compare this to the industry average of 0.5, and it is safe to say that MGLN is undervalued compared to many of its peers on this important metric.
MAGELLAN HLTH PS Ratio (TTM)
MAGELLAN HLTH PS Ratio (TTM) | MAGELLAN HLTH Quote
MGLN Earnings Estimate Revisions Moving in the Right Direction
The solid value ratios outlined in the preceding paragraphs might be enough for some investors, but we should also note that the earnings estimate revisions have been trending in a positive direction as well. Analysts who follow MGLN stock have been raising their estimates for the company lately, meaning that the EPS picture is looking a bit more favorably for Magellan now.
Over the past 30 days, 4 earnings estimates have gone higher compared to none lower for the full year, while we are also seeing that 4 estimate has move upwards with no downward revision for the next year time frame too. These revisions have helped to boost the consensus estimate as 30 days ago MGLN was expected to post earnings of $2.38 per share for the full year though today it looks to have EPS of $3.15 for the full year.
Bottom Line
For the reasons detailed above, investors shouldn’t be surprised to read that we have MGLN as a stock with a Value Score of ‘A’ and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
So if you are a value investor, definitely keep MGLN on your short list as this looks to be a stock that is very well-positioned for gains in the near term.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>