Value Investing in 2025: Why Labcorp (LH) and Zacks Style Scores Are Pointing to Opportunity

In an era where macroeconomic uncertainties persist and growth-at-all-costs strategies face scrutiny, value investing has reemerged as a disciplined approach to capital preservation and long-term returns. The healthcare sector, with its inherent resilience and demand-driven dynamics, offers fertile ground for such strategies. Among its constituents, Labcorp (LH) stands out as a compelling case study, combining robust fundamentals with favorable signals from Zacks' proprietary metrics. For value investors, the alignment of these factors presents a rare opportunity to capitalize on a company that balances growth potential with valuation discipline.

A Deep Dive into Labcorp's Fundamentals

Labcorp's third-quarter 2025 results underscore its operational strength. The company reported adjusted earnings per share of $4.18, surpassing the Zacks Consensus Estimate by 1.21% and reflecting a 19.4% year-over-year increase. This performance is not an anomaly but part of a broader trend: its diagnostics division, a core growth engine, generated $2.77 billion in revenue-a 8.5% rise compared to 2024. Such consistency in earnings and revenue growth is critical for value investors, who prioritize companies with durable cash flows and predictable business models.

Valuation metrics further reinforce Labcorp's appeal. As of Q3 2025, its trailing twelve-month (TTM) price-to-earnings (P/E) ratio stands at 24.78, while the forward P/E is 28.55 according to financial data. These figures, though higher than historical averages for the sector, are justified by the company's 19.4% EPS growth and its ability to convert revenue into free cash flow. The P/Free Cash Flow (FCF) ratio, at 18.38 TTM and 24.56 for the fiscal year, indicates that Labcorp's shares trade at a discount relative to its cash-generating capacity-a key criterion for value investors. Meanwhile, the price-to-book (P/B) ratio of 2.41 TTM suggests that the company's tangible assets are undervalued relative to its market capitalization, offering a margin of safety.

Zacks' Proprietary Metrics: A Validation of Value

Zacks' Style Scores provide an additional layer of validation. Labcorp holds a Value Style Score of A, signaling that its valuation metrics are attractive relative to peers and historical norms according to Zacks analysis. This aligns with the company's strong earnings revisions and improved free cash flow, which together suggest that the market has not yet fully priced in its potential. The Growth Style Score of A further underscores this, reflecting robust earnings growth forecasts and a trajectory of innovation in diagnostics-a sector poised for long-term demand according to Zacks analysis.

The VGM (Value, Growth, and Momentum) Score of A consolidates these strengths into a single, actionable metric, indicating that Labcorp excels across multiple dimensions of investment appeal according to Zacks analysis. However, the Momentum Style Score of F-which measures recent price trends-reveals a nuance: while fundamentals are compelling, the stock has not experienced significant upward momentum. For value investors, this divergence is less concerning, as it suggests the stock may still be undervalued relative to its intrinsic worth.

Strategic Implications for Value Investors
The interplay between Labcorp's fundamentals and Zacks' metrics highlights a strategic inflection point. The healthcare sector, often insulated from cyclical downturns, benefits from structural tailwinds such as an aging population and advancements in personalized medicine. Labcorp's diagnostics division, a key driver of its growth, is well-positioned to capitalize on these trends. Moreover, the company's recent guidance hike-from $16.15 to $16.50 per share-demonstrates management's confidence in sustaining its momentum.

For value investors, the current valuation ratios, while not "cheap" in absolute terms, are justified by the company's earnings trajectory and cash flow generation. The Zacks Value and VGM scores act as a filter, isolating Labcorp from peers that may trade at similar multiples but lack comparable growth or balance-sheet strength. This alignment of fundamentals and proprietary metrics reduces the risk of overpaying for growth, a common pitfall in value investing.

Conclusion

Labcorp's performance in 2025 exemplifies the potential of value investing in the healthcare sector. By combining disciplined valuation analysis with Zacks' data-driven insights, investors can identify opportunities like Labcorp-companies that balance growth with affordability. While the Momentum score cautions against relying solely on price trends, the broader case for Labcorp remains robust. For those willing to look beyond short-term volatility, the current moment offers a window to act before the market fully recognizes the company's intrinsic value.