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Are Investors Undervaluing Discovery Communications (DISCA) Right Now?

Zacks Equity Research
Updated
Ross Stores (ROST) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a likely beat in its next quarterly report.

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.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Discovery Communications (DISCA) is a stock many investors are watching right now. DISCA is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 10.18, while its industry has an average P/E of 22.14. Over the past year, DISCA's Forward P/E has been as high as 11.89 and as low as 6.95, with a median of 9.11.

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We also note that DISCA holds a PEG ratio of 0.45. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. DISCA's industry has an average PEG of 1.24 right now. Over the last 12 months, DISCA's PEG has been as high as 1.31 and as low as 0.41, with a median of 0.65.

These are just a handful of the figures considered in Discovery Communications's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that DISCA is an impressive value stock right now.


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Zacks Investment Research