We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Sabra Healthcare (SBRA) a Great Stock for Value Investors?
Read MoreHide Full Article
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 Sabra Healthcare REIT, Inc. (SBRA - 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, Sabra Healthcare has a trailing twelve months PE ratio of 9.5, as you can see in the chart below: Image Source: Zacks Investment Research
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 25.2. If we focus on the long-term PE trend, Sabra Healthcare’s current PE level puts it marginally above its midpoint over the past five years.
Image Source: Zacks Investment Research
Further, the stock’s PE also compares favorably with the sector’s trailing twelve months PE ratio, which stands at 16.3. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
Image Source: Zacks Investment Research
We should also point out that Sabra Healthcare has a forward PE ratio (price relative to this year’s earnings) of just 10.4, which is higher than the current level. So, it is fair to expect an increase in the company’s share price in the near term.
P/CF Ratio
An often overlooked ratio that can still be a great indicator of value is the price/cash flow metric. This ratio doesn’t take amortization and depreciation into account, so can give a more accurate picture of the financial health in a business. This is a preferred metric to some valuation investors because cash flows are (a) generally less prone to manipulation by the company’s management, and (b) are less affected by variation in accounting policies between different companies.
The ratio is generally applied to find out whether a company’s stock is overpriced or underpriced with reference to its cash flows generation potential compared with its competitors. However, it is not commonly used for cross-industry comparison, as the average price to cash flow ratio varies from industry to industry.
In this case, Sabra Healthcare’s P/CF ratio of 10.1 is considerably lower than its industry’s figure of 23.7, which indicates that the stock is undervalued in this respect.
Image Source: Zacks Investment Research
Broad Value Outlook
In aggregate, Sabra Healthcare currently has a Zacks Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Sabra Healthcare a solid choice for value investors.
What About the Stock Overall?
Though Sabra Healthcare 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 C. This gives SBRA a Zacks 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 discouraging. The current quarter has seen one upward and one downward revision in the past sixty days period, while the full year estimate has seen one upward revision and two downward revisions in the same time period.
As a result, the consensus estimate for the current quarter has moved down 2.6% and the full year has remained unchanged, in the past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This bearish trend is why the stock has just a Zacks Rank #3 (Hold) despite strong value metrics and why we are looking for in-line performance from the company in the near term.
Bottom Line
Sabra Healthcare might not be an inspired choice for value investors, as a sluggish industry rank (bottom 34% out of more than 250 industries) and a Zacks Rank #3, might not make analysts excited about this company overall. Nonetheless, over the past year, the industry has clearly outperformed the broader market, as you can see below: Image Source: Zacks Investment Research
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Is Sabra Healthcare (SBRA) 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 Sabra Healthcare REIT, Inc. (SBRA - 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, Sabra Healthcare has a trailing twelve months PE ratio of 9.5, as you can see in the chart below:
Image Source: Zacks Investment Research
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 25.2. If we focus on the long-term PE trend, Sabra Healthcare’s current PE level puts it marginally above its midpoint over the past five years.
Image Source: Zacks Investment Research
Further, the stock’s PE also compares favorably with the sector’s trailing twelve months PE ratio, which stands at 16.3. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
Image Source: Zacks Investment Research
We should also point out that Sabra Healthcare has a forward PE ratio (price relative to this year’s earnings) of just 10.4, which is higher than the current level. So, it is fair to expect an increase in the company’s share price in the near term.
P/CF Ratio
An often overlooked ratio that can still be a great indicator of value is the price/cash flow metric. This ratio doesn’t take amortization and depreciation into account, so can give a more accurate picture of the financial health in a business. This is a preferred metric to some valuation investors because cash flows are (a) generally less prone to manipulation by the company’s management, and (b) are less affected by variation in accounting policies between different companies.
The ratio is generally applied to find out whether a company’s stock is overpriced or underpriced with reference to its cash flows generation potential compared with its competitors. However, it is not commonly used for cross-industry comparison, as the average price to cash flow ratio varies from industry to industry.
In this case, Sabra Healthcare’s P/CF ratio of 10.1 is considerably lower than its industry’s figure of 23.7, which indicates that the stock is undervalued in this respect.
Image Source: Zacks Investment Research
Broad Value Outlook
In aggregate, Sabra Healthcare currently has a Zacks Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Sabra Healthcare a solid choice for value investors.
What About the Stock Overall?
Though Sabra Healthcare 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 C. This gives SBRA a Zacks 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 discouraging. The current quarter has seen one upward and one downward revision in the past sixty days period, while the full year estimate has seen one upward revision and two downward revisions in the same time period.
As a result, the consensus estimate for the current quarter has moved down 2.6% and the full year has remained unchanged, in the past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Sabra Healthcare REIT, Inc. Price and Consensus
Sabra Healthcare REIT, Inc. price-consensus-chart | Sabra Healthcare REIT, Inc. Quote
This bearish trend is why the stock has just a Zacks Rank #3 (Hold) despite strong value metrics and why we are looking for in-line performance from the company in the near term.
Bottom Line
Sabra Healthcare might not be an inspired choice for value investors, as a sluggish industry rank (bottom 34% out of more than 250 industries) and a Zacks Rank #3, might not make analysts excited about this company overall. Nonetheless, over the past year, the industry has clearly outperformed the broader market, as you can see below:
Image Source: Zacks Investment Research
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.