Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Envision Healthcare Corporation stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Envision Healthcare has a trailing twelve months PE ratio of 17.61, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 19.89. If we focus on the stock’s long-term PE trend, the current level puts Envision Healthcare’s current PE ratio somewhat below its midpoint (which is 19.76) over the past five years, with the number falling over the past few months. Moreover, the current level is below the highs for this stock, suggesting that the stock is undervalued compared to its historical levels.
Further, the stock’s PE also compares favorably with the Zacks classified Medical sector’s trailing twelve months PE ratio, which stands at 18.04. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Envision Healthcare has a forward PE ratio (price relative to this year’s earnings) of just 15.19, so it is fair to say that a slightly more value-oriented path may be ahead for Envision Healthcare stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Envision Healthcare has a P/S ratio of about 1.22. This is somewhat lower than the S&P 500 average, which comes in at 2.97 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
If anything, Envision Healthcare is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Envision Healthcare currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Envision Healthcare a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Envision Healthcare is just 1.12, a level that is slightly lower than the industry average of 1.51. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, Envision Healthcare is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Envision Healthcare might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘F’. This gives Envision Healthcare a Zacks VGM score—or its overarching fundamental grade—of ‘C’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen one estimate go higher in the past sixty days and two lower, while the full year estimate has also seen a similar trend.
This has had a mixed impact on the consensus estimate, as the current quarter consensus estimate has inched up by 0.8% in the past two months, while the full year estimate has remained constant. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Envision Healthcare is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, a sluggish industry rank (bottom 20% out of more than 250 industries) and a Zacks Rank #3, make it hard to get too excited about this company overall. In fact, over the past two years, the Zacks Medical-Outpatient/Home Care sector has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>
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Should Value Investors Choose Envision Healthcare (EVHC)?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Envision Healthcare Corporation stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Envision Healthcare has a trailing twelve months PE ratio of 17.61, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 19.89. If we focus on the stock’s long-term PE trend, the current level puts Envision Healthcare’s current PE ratio somewhat below its midpoint (which is 19.76) over the past five years, with the number falling over the past few months. Moreover, the current level is below the highs for this stock, suggesting that the stock is undervalued compared to its historical levels.
Further, the stock’s PE also compares favorably with the Zacks classified Medical sector’s trailing twelve months PE ratio, which stands at 18.04. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Envision Healthcare has a forward PE ratio (price relative to this year’s earnings) of just 15.19, so it is fair to say that a slightly more value-oriented path may be ahead for Envision Healthcare stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Envision Healthcare has a P/S ratio of about 1.22. This is somewhat lower than the S&P 500 average, which comes in at 2.97 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
If anything, Envision Healthcare is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Envision Healthcare currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Envision Healthcare a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Envision Healthcare is just 1.12, a level that is slightly lower than the industry average of 1.51. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, Envision Healthcare is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Envision Healthcare might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘F’. This gives Envision Healthcare a Zacks VGM score—or its overarching fundamental grade—of ‘C’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen one estimate go higher in the past sixty days and two lower, while the full year estimate has also seen a similar trend.
This has had a mixed impact on the consensus estimate, as the current quarter consensus estimate has inched up by 0.8% in the past two months, while the full year estimate has remained constant. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Envision Healthcare Corp. Price and Consensus
Envision Healthcare Corp. Price and Consensus | Envision Healthcare Corp. Quote
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Envision Healthcare is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, a sluggish industry rank (bottom 20% out of more than 250 industries) and a Zacks Rank #3, make it hard to get too excited about this company overall. In fact, over the past two years, the Zacks Medical-Outpatient/Home Care sector has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>