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Should Value Investors Buy AbbVie (ABBV) Stock?

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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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is AbbVie (ABBV - Free Report) . ABBV is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 6.94. This compares to its industry's average Forward P/E of 16.19. Over the last 12 months, ABBV's Forward P/E has been as high as 10.29 and as low as 5.96, with a median of 8.57.

Investors should also note that ABBV holds a PEG ratio of 1.54. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ABBV's industry has an average PEG of 2.10 right now. Over the last 12 months, ABBV's PEG has been as high as 2.29 and as low as 1.26, with a median of 1.56.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. ABBV has a P/S ratio of 3.49. This compares to its industry's average P/S of 4.28.

Finally, we should also recognize that ABBV has a P/CF ratio of 11.31. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. ABBV's P/CF compares to its industry's average P/CF of 16.51. Over the past 52 weeks, ABBV's P/CF has been as high as 25.71 and as low as 9.68, with a median of 16.38.

These figures are just a handful of the metrics value investors tend to look at, but they help show that AbbVie is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ABBV feels like a great value stock at the moment.


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