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Is Quest Diagnostics (DGX) a Great Value Stock Right Now?

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.

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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is Quest Diagnostics (DGX). DGX is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 17.20. This compares to its industry's average Forward P/E of 20.90. DGX's Forward P/E has been as high as 23.41 and as low as 11.17, with a median of 15.83, all within the past year.

DGX is also sporting a PEG ratio of 1.31. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. DGX's industry currently sports an average PEG of 2.03. Within the past year, DGX's PEG has been as high as 3.68 and as low as 1.29, with a median of 2.12.

Another valuation metric that we should highlight is DGX's P/B ratio of 2.99. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. DGX's current P/B looks attractive when compared to its industry's average P/B of 3.08. Over the past year, DGX's P/B has been as high as 3.04 and as low as 1.72, with a median of 2.53.

Finally, investors will want to recognize that DGX has a P/CF ratio of 15.34. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 26.35. Over the past 52 weeks, DGX's P/CF has been as high as 15.60 and as low as 8.61, with a median of 13.21.

These are just a handful of the figures considered in Quest Diagnostics's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that DGX is an impressive value stock right now.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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