Is WellCare Health Plans (WCG) Stock Undervalued 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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 stock to keep an eye on is WellCare Health Plans (WCG). WCG is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
We also note that WCG holds a PEG ratio of 1.08. 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. WCG's PEG compares to its industry's average PEG of 1.13. WCG's PEG has been as high as 1.77 and as low as 0.98, with a median of 1.38, all within the past year.
Another valuation metric that we should highlight is WCG's P/B ratio of 2.88. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 3.41. WCG's P/B has been as high as 5.37 and as low as 2.66, with a median of 3.63, over the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that WellCare Health Plans is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, WCG feels like a great value stock at the moment.
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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.