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Should Value Investors Pick DISH Network (DISH) Stock Now?

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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 DISH Network (DISH - 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, DISH Network has a trailing twelve months PE ratio of 7.7, as you can see in the chart below:

Zacks Investment ResearchImage 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 23.7. If we focus on the long-term PE trend, its current PE level puts it below its midpoint over the past five years.

Zacks Investment ResearchImage Source: Zacks Investment Research

Further, the stock’s PE also compares favorably with its sector’s trailing twelve months PE ratio, which stands at 67.9. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.

Zacks Investment ResearchImage Source: Zacks Investment Research

We should also point out that DISH Network has a forward PE ratio (price relative to this year’s earnings) of just 8.2, 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/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, DISH Network has a P/S ratio of about 1.1. This is a lower than the S&P 500 average, which comes in at 4.9 right now. We can see in the chart below, this is below the highs for this stock in particular over the past few years.

Zacks Investment ResearchImage Source: Zacks Investment Research

If anything, this suggests some level of undervalued trading—at least compared to historical norms.

Broad Value Outlook

In aggregate, DISH Network currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes DISH Network a solid choice for value investors and some of its other key metrics make this pretty clear too.

For example, the P/CF ratio (another great indicator of value) comes in at 6.6, which is better than the industry average of 10.1. Clearly, DISH is a solid choice on the value front from multiple angles.

What About the Stock Overall?

Though DISH Network 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 Score of B and a Momentum Score of B. This gives DISH a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)

Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen two estimates each go up and down while the full-year 2021 has seen two estimates go up and three down in the past sixty days.

As a result, the consensus estimate for the current quarter has improved by 3.7% while the same for full-year 2021 has risen 0.5% in the past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:

Despite having a bullish trend, DISH Network carries a Zacks Rank #3 (Hold). This indicates that analysts have some apprehensions about the stock in the immediate future. Thus, we are looking for in-line performance from the company in the near term.

Bottom Line

DISH Network 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 13%) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the industry has clearly underperformed the broader market, as you can see below:

Zacks Investment ResearchImage Source: Zacks Investment Research

So, despite a Zacks Rank #3, we believe that bullish analyst sentiment and favorable industry factors make this value stock a compelling pick.


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