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Is Premier (PINC) a Great Stock for Value Investors?
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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 Premier, Inc. (PINC - Free Report) 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, Premier has a trailing twelve months PE ratio of 17.9, 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 stands at about 21x. If we focus on the long-term PE trend, Premier’s current PE level puts it below its midpoint over the past five years, with the number having risen rapidly over the past few months.
Further, the stock’s PE also compares favorably with the broader industry’s trailing twelve months PE ratio, which stands at 15.7. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Premier has a forward PE ratio (price relative to this year’s earnings) of just 14.2, so it is fair to say that a slightly more value-oriented path may be ahead for Premier 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, Premier has a P/S ratio of about 2.9. This is a bit lower than the S&P 500 average, which comes in at 3.4x right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, PINC 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, Premier currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Premier a solid choice for value investors.
What About the Stock Overall?
Though Premier 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 Score of B and a Momentum Score of A. This gives PINC a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been upbeat. The current quarter has seen eight estimates go higher in the past sixty days compared to two lower, while the full year estimate has seen nine up and one down in the same time period.
This has had just a small impact on the consensus estimate though as the current quarter consensus estimate has risen by 13.8% in the past two months, while the full year estimate has surged 9.1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
The PNC Financial Services Group, Inc Price and Consensus
Notably, the stock has a long term expected earnings growth of 12.4% and holds a Zacks Rank #3 (Hold). These mixed expectations indicate that while the stock’s growth story might be good over the long term, analysts have some apprehensions about the stock in the immediate future. Thus, we are looking for in-line performance from the company in the near term.
Bottom Line
Premier is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Further, a strong industry rank (among Bottom Top 48% of more than 250 industries) instills our confidence.
However, with a Zacks Rank #3 it is hard to get too excited about this company overall. In fact, over the past two years, the broader industry has clearly underperformed the market at large, 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.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Image: Bigstock
Is Premier (PINC) a Great Stock for Value Investors?
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 Premier, Inc. (PINC - Free Report) 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, Premier has a trailing twelve months PE ratio of 17.9, 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 stands at about 21x. If we focus on the long-term PE trend, Premier’s current PE level puts it below its midpoint over the past five years, with the number having risen rapidly over the past few months.
Further, the stock’s PE also compares favorably with the broader industry’s trailing twelve months PE ratio, which stands at 15.7. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Premier has a forward PE ratio (price relative to this year’s earnings) of just 14.2, so it is fair to say that a slightly more value-oriented path may be ahead for Premier 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, Premier has a P/S ratio of about 2.9. This is a bit lower than the S&P 500 average, which comes in at 3.4x right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, PINC 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, Premier currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Premier a solid choice for value investors.
What About the Stock Overall?
Though Premier 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 Score of B and a Momentum Score of A. This gives PINC a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been upbeat. The current quarter has seen eight estimates go higher in the past sixty days compared to two lower, while the full year estimate has seen nine up and one down in the same time period.
This has had just a small impact on the consensus estimate though as the current quarter consensus estimate has risen by 13.8% in the past two months, while the full year estimate has surged 9.1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
The PNC Financial Services Group, Inc Price and Consensus
The PNC Financial Services Group, Inc Price and Consensus | The PNC Financial Services Group, Inc Quote
Notably, the stock has a long term expected earnings growth of 12.4% and holds a Zacks Rank #3 (Hold). These mixed expectations indicate that while the stock’s growth story might be good over the long term, analysts have some apprehensions about the stock in the immediate future. Thus, we are looking for in-line performance from the company in the near term.
Bottom Line
Premier is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Further, a strong industry rank (among Bottom Top 48% of more than 250 industries) instills our confidence.
However, with a Zacks Rank #3 it is hard to get too excited about this company overall. In fact, over the past two years, the broader industry has clearly underperformed the market at large, 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.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Download the new report now>>