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Is Select Medical (SEM) Stock Undervalued Right Now?

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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.

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 use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is Select Medical (SEM - Free Report) . SEM is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 15.04 right now. For comparison, its industry sports an average P/E of 18.25. SEM's Forward P/E has been as high as 20.21 and as low as 11.59, with a median of 14.77, all within the past year.

Investors should also note that SEM holds a PEG ratio of 1. 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. SEM's industry currently sports an average PEG of 1.41. Within the past year, SEM's PEG has been as high as 1.35 and as low as 0.77, with a median of 0.98.

Finally, our model also underscores that SEM has a P/CF ratio of 10.24. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 15.92. Within the past 12 months, SEM's P/CF has been as high as 10.65 and as low as 4.62, with a median of 7.65.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Select Medical is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SEM feels like a great value stock at the moment.


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