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Is Select Medical (SEM) a Great Value Stock 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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Select Medical (SEM - Free Report) . SEM is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 14.75, while its industry has an average P/E of 15.32. SEM's Forward P/E has been as high as 15.42 and as low as 9.22, with a median of 12.80, all within the past year.

We also note that SEM holds a PEG ratio of 1.18. 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 has an average PEG of 1.28 right now. Over the past 52 weeks, SEM's PEG has been as high as 1.18 and as low as 0.39, with a median of 0.56.

Investors should also recognize that SEM has a P/B ratio of 2.46. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 3.49. Within the past 52 weeks, SEM's P/B has been as high as 2.88 and as low as 1.79, with a median of 2.24.

Finally, our model also underscores that SEM has a P/CF ratio of 8.12. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 17.76. Over the past year, SEM's P/CF has been as high as 10.10 and as low as 6.11, with a median of 7.62.

These are only a few of the key metrics included in Select Medical's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SEM looks like an impressive value stock at the moment.


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