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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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader 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.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest 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 #1 (Strong Buy), as well as a Value grade of A. The stock holds a P/E ratio of 17.68, while its industry has an average P/E of 18.03. Over the past 52 weeks, SEM's Forward P/E has been as high as 20.93 and as low as 11.69, with a median of 13.68.

SEM is also sporting a PEG ratio of 1.26. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SEM's PEG compares to its industry's average PEG of 1.36. SEM's PEG has been as high as 1.50 and as low as 0.83, with a median of 0.98, all within the past year.

Investors should also recognize that SEM has a P/B ratio of 3.71. The P/B ratio is used to compare a stock's market value with 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 3.75. SEM's P/B has been as high as 3.71 and as low as 1.92, with a median of 2.27, over the past year.

Finally, investors will want to recognize that SEM has a P/CF ratio of 8.81. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. SEM's current P/CF looks attractive when compared to its industry's average P/CF of 14.76. SEM's P/CF has been as high as 8.81 and as low as 4.71, with a median of 5.74, all within the past year.

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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