Many investors like to look for value in stocks, but this can be very tough to define. There is great debate regarding which metrics are the best to focus on in this regard, and which are not really quality indicators of future performance. Fortunately, with our new style score system we have identified the key statistics to pay close attention to and thus which stocks might be the best for value investors in the near term.
This method discovered several great candidates for value-oriented investors, but today let’s focus on Providence Service Corp. PRSC as this stock is looking especially impressive right now. And while there are numerous reasons why this is the case, we have highlighted three of the most vital reasons for PRSC’s status as a solid value stock below:
Price to Forward Sales for Providence Service
One of the most underrated ratios for value investors is the price/forward sales metric. This ratio shows investors how much they are paying for each dollar of revenues generated. In other words, a lower number is better here while a price to sales ratio of 1 means that you are paying one dollar for each dollar in sales.
With a P/S ratio of 0.41, PRSC investors are paying 41 cents in stock price for each dollar of revenue generated by the company. Compare this to the industry average of 0.79, and it is safe to say that PRSC is undervalued compared to many of its peers on this important metric.
PEG Ratio for PRSC
While earnings are definitely important, it is vital to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio as this metric looks to show investors how much they are paying for each unit of earnings growth.
PRSC manages to impress on this front as well, as the company’s PEG is just 1.13, suggesting that Providence Service is trading as a relative bargain right now. This is particularly the case when you compare this PEG to the industry, as the broader segment has an average PEG of 1.20 in comparison.
PRSC Earnings Estimate Revisions Moving in the Right Direction
The solid value ratios outlined in the preceding paragraphs might be enough for some investors, but we should also note that the earnings estimate revisions have been trending in a positive direction as well. Analysts who follow PRSC stock have been raising their estimates for the company lately, meaning that the EPS picture is looking a bit more favorably for Providence Service now.
Over the past 60 days 1 earnings estimate has gone higher compared to no downward revisions for the full year, while we are also seeing 1 upward revision with no downward revisions for the next year time frame too. These revisions have helped to boost the consensus estimate as 60 days ago PRSC was expected to post earnings of $2.95 per share for the full year though today it looks to have EPS of $3.00 for the full year.
Bottom Line
For the reasons detailed above, investors shouldn’t be surprised to read that we have PRSC as a stock with a Value Score of ‘B’ and a Zacks Rank #2 (Buy). So if you are a value investor, definitely keep PRSC on your short list as this looks be a stock that is very well-positioned for gains in the near term.
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PROVIDENCE SVC (PRSC): Free Stock Analysis Report
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