Is Discovery Communications (DISCA) Stock Undervalued 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.

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Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 stock to keep an eye on is Discovery Communications (DISCA). DISCA is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 13.13, while its industry has an average P/E of 30.60. Over the last 12 months, DISCA’s Forward P/E has been as high as 25.17 and as low as 5.71, with a median of 10.64.

DISCA is also sporting a PEG ratio of 1.23. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company’s expected EPS growth rate. DISCA’s PEG compares to its industry’s average PEG of 2.25. Over the past 52 weeks, DISCA’s PEG has been as high as 1.35 and as low as 0.45, with a median of 0.72.

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

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