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Are Investors Undervaluing HCA Holdings (HCA) Right Now?

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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.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is HCA Holdings (HCA - Free Report) . HCA is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 13.74. This compares to its industry's average Forward P/E of 14.18. Over the past year, HCA's Forward P/E has been as high as 14.38 and as low as 10.44, with a median of 11.75.

Investors will also notice that HCA has a PEG ratio of 1.13. 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. HCA's PEG compares to its industry's average PEG of 1.29. Over the last 12 months, HCA's PEG has been as high as 1.32 and as low as 0.90, with a median of 1.04.

Value investors will likely look at more than just these metrics, but the above data helps show that HCA Holdings is likely undervalued currently. And when considering the strength of its earnings outlook, HCA sticks out at as one of the market's strongest value stocks.


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