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Should Value Investors Buy Performant Financial (PFMT) Stock?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 Performant Financial (PFMT - Free Report) . PFMT is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 15.10, while its industry has an average P/E of 16.85. Over the last 12 months, PFMT's Forward P/E has been as high as 34.69 and as low as -75.15, with a median of -8.43.

Another valuation metric that we should highlight is PFMT's P/B ratio of 0.77. The P/B ratio pits a stock's market value against 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 1.43. Over the past 12 months, PFMT's P/B has been as high as 1.30 and as low as 0.65, with a median of 0.96.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. PFMT has a P/S ratio of 0.26. This compares to its industry's average P/S of 0.46.

These are only a few of the key metrics included in Performant Financial'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, PFMT looks like an impressive value stock at the moment.


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