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Are Investors Undervaluing These Medical Stocks Right Now?
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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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.
One company value investors might notice is GlaxoSmithKline (GSK - Free Report) . GSK is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
Another notable valuation metric for GSK is its P/B ratio of 3.99. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 6.46. Within the past 52 weeks, GSK's P/B has been as high as 4.20 and as low as 3.32, with a median of 3.62.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. GSK has a P/S ratio of 2.54. This compares to its industry's average P/S of 3.69.
Finally, investors will want to recognize that GSK has a P/CF ratio of 9.10. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 20.50. Over the past 52 weeks, GSK's P/CF has been as high as 10.11 and as low as 7.81, with a median of 8.79.
If you're looking for another solid Large Cap Pharmaceuticals value stock, take a look at Pfizer (PFE - Free Report) . PFE is a # 2 (Buy) stock with a Value score of A.
Shares of Pfizer currently holds a Forward P/E ratio of 8.12, and its PEG ratio is 0.65. In comparison, its industry sports average P/E and PEG ratios of 13.31 and 1.34.
Over the past year, PFE's P/E has been as high as 14.02, as low as 8.12, with a median of 11.62; its PEG ratio has been as high as 1.98, as low as 0.65, with a median of 2.55 during the same time period.
Additionally, Pfizer has a P/B ratio of 3.74 while its industry's price-to-book ratio sits at 6.46. For PFE, this valuation metric has been as high as 4.52, as low as 2.91, with a median of 3.24 over the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that GlaxoSmithKline and Pfizer are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, GSK and PFE feels like a great value stock at the moment.
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Are Investors Undervaluing These Medical Stocks Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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.
One company value investors might notice is GlaxoSmithKline (GSK - Free Report) . GSK is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
Another notable valuation metric for GSK is its P/B ratio of 3.99. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 6.46. Within the past 52 weeks, GSK's P/B has been as high as 4.20 and as low as 3.32, with a median of 3.62.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. GSK has a P/S ratio of 2.54. This compares to its industry's average P/S of 3.69.
Finally, investors will want to recognize that GSK has a P/CF ratio of 9.10. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 20.50. Over the past 52 weeks, GSK's P/CF has been as high as 10.11 and as low as 7.81, with a median of 8.79.
If you're looking for another solid Large Cap Pharmaceuticals value stock, take a look at Pfizer (PFE - Free Report) . PFE is a # 2 (Buy) stock with a Value score of A.
Shares of Pfizer currently holds a Forward P/E ratio of 8.12, and its PEG ratio is 0.65. In comparison, its industry sports average P/E and PEG ratios of 13.31 and 1.34.
Over the past year, PFE's P/E has been as high as 14.02, as low as 8.12, with a median of 11.62; its PEG ratio has been as high as 1.98, as low as 0.65, with a median of 2.55 during the same time period.
Additionally, Pfizer has a P/B ratio of 3.74 while its industry's price-to-book ratio sits at 6.46. For PFE, this valuation metric has been as high as 4.52, as low as 2.91, with a median of 3.24 over the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that GlaxoSmithKline and Pfizer are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, GSK and PFE feels like a great value stock at the moment.