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Should Value Investors Buy Molina (MOH) Stock?

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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 to watch right now is Molina (MOH). MOH is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 14.04 right now. For comparison, its industry sports an average P/E of 17.49. MOH's Forward P/E has been as high as 14.95 and as low as 9.07, with a median of 11.50, all within the past year.

Finally, investors will want to recognize that MOH has a P/CF ratio of 13.20. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. MOH's P/CF compares to its industry's average P/CF of 14.76. MOH's P/CF has been as high as 13.91 and as low as 7.78, with a median of 10, all within the past year.

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


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