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Is Ensign Group (ENSG) a Great Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put The Ensign Group, Inc. (ENSG - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Ensign Group has a trailing twelve months PE ratio of 18.7, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.3. If we focus on the stock’s long-term PE trend, the current level puts Ensign Group’s current PE ratio slightly above its midpoint (which is 16.9) over the past five years.
Further, the stock’s PE also compares favorably with the sector’s trailing twelve months PE ratio, which stands at 20.4. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Ensign Group has a forward PE ratio (price relative to this year’s earnings) of just 14.6, so it is fair to say that a slightly more value-oriented path may be ahead for Ensign Group’s stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Ensign Group has a P/S ratio of about 0.6. This is substantially lower than the S&P 500 average, which comes in at 3.2 right now. Also, as we can see in the chart below, this is somewhat below the highs for this stock in particular over the past few years.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Ensign Group currently has a Value Style Score of A, putting it into the top 20% of all stocks we cover from this look. This makes ENSG a solid choice for value investors.
What About the Stock Overall?
Though Ensign Group might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of D and a Momentum score of F. This gives ENSG a VGM score—or its overarching fundamental grade—of C. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been disappointing. The current quarter has seen one estimate go lower in the past sixty days, compared to none higher, while the full year estimate has seen two downward and no upward revisions in the same time period.
This has had a noticeable impact on the consensus estimate, as the current quarter consensus estimate has not witnessed any estimate revision in the past two months, while the full year estimate has fallen about 3.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This somewhat bearish trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Ensign Group is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (bottom 20% out of more than 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past one year, the sector has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates, analyst sentiment and broader factors to turn favorable in this name first, but once that happen, this stock could be a compelling pick.
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Image: Bigstock
Is Ensign Group (ENSG) a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put The Ensign Group, Inc. (ENSG - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Ensign Group has a trailing twelve months PE ratio of 18.7, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.3. If we focus on the stock’s long-term PE trend, the current level puts Ensign Group’s current PE ratio slightly above its midpoint (which is 16.9) over the past five years.
Further, the stock’s PE also compares favorably with the sector’s trailing twelve months PE ratio, which stands at 20.4. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Ensign Group has a forward PE ratio (price relative to this year’s earnings) of just 14.6, so it is fair to say that a slightly more value-oriented path may be ahead for Ensign Group’s stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Ensign Group has a P/S ratio of about 0.6. This is substantially lower than the S&P 500 average, which comes in at 3.2 right now. Also, as we can see in the chart below, this is somewhat below the highs for this stock in particular over the past few years.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Ensign Group currently has a Value Style Score of A, putting it into the top 20% of all stocks we cover from this look. This makes ENSG a solid choice for value investors.
What About the Stock Overall?
Though Ensign Group might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of D and a Momentum score of F. This gives ENSG a VGM score—or its overarching fundamental grade—of C. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been disappointing. The current quarter has seen one estimate go lower in the past sixty days, compared to none higher, while the full year estimate has seen two downward and no upward revisions in the same time period.
This has had a noticeable impact on the consensus estimate, as the current quarter consensus estimate has not witnessed any estimate revision in the past two months, while the full year estimate has fallen about 3.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
The Ensign Group, Inc. Price and Consensus
The Ensign Group, Inc. Price and Consensus | The Ensign Group, Inc. Quote
This somewhat bearish trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Ensign Group is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (bottom 20% out of more than 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past one year, the sector has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates, analyst sentiment and broader factors to turn favorable in this name first, but once that happen, this stock could be a compelling pick.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guideto help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Download the new report now>>