InvestorsObserver gives The Ensign Group, Inc. (ENSG) a strong valuation score of 88 from its analysis. The proprietary scoring system considers the underlying health of a company by analyzing its stock price, earnings, and growth rate. ENSG currently holds a better value than 88% of stocks based on these metrics. Long term investors focused on buying-and-holding should find the valuation ranking system most relevant when making investment decisions.
Metrics Analysis
ENSG has a trailing twelve month Price to Earnings (PE) ratio of 22.3. The historical average of roughly 15 shows a poor value for ENSG stock as investors are paying higher share prices relative to the company's earnings. ENSG's high trailing PE ratio shows that the firm has been trading above its fair market value recently. Its trailing 12-month earnings per share (EPS) of 2.43 does not justify the stock's current price. However, trailing PE ratios do not factor in the company's projected growth rate, resulting in many newer firms having high PE ratios due to high growth potential enticing investors despite inadequate earnings.
ENSG currently has a 12-month-forward-PE-to-Growth (PEG) ratio of 1.28. The market is currently overvaluing ENSG in relation to its projected growth due to the PEG ratio being above the fair market value of 1. ENSG's PEG comes from its forward price to earnings ratio being divided by its growth rate. Due to the inclusion of more fundamentals of a company's overall health and a focus on the future rather than the past, PEG ratios are one of the most used valuation metrics by analysts today.
Summary
ENSG' has a weak valuation at its current share price on account of a overvalued PEG ratio despite strong growth. ENSG's PE and PEG are worse than the market average leading to a below average valuation score.
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