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, 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.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One stock to keep an eye on is H Lundbeck (HLUYY). HLUYY is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 9.83. This compares to its industry's average Forward P/E of 14.35. Over the past year, HLUYY's Forward P/E has been as high as 22.42 and as low as 9.83, with a median of 15.19.
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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. HLUYY has a P/S ratio of 1.72. This compares to its industry's average P/S of 3.77.
Finally, our model also underscores that HLUYY has a P/CF ratio of 6.61. 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. This stock's P/CF looks attractive against its industry's average P/CF of 20.27. Over the past year, HLUYY's P/CF has been as high as 32.51 and as low as 6.61, with a median of 8.42.
Another great Large Cap Pharmaceuticals stock you could consider is Pfizer (PFE), which is a # 2 (Buy) stock with a Value Score of A.
Pfizer is trading at a forward earnings multiple of 11.56 at the moment, with a PEG ratio of 1.12. This compares to its industry's average P/E of 14.35 and average PEG ratio of 1.49.
PFE's price-to-earnings ratio has been as high as 14.02 and as low as 10.19, with a median of 11.59, while its PEG ratio has been as high as 3.24 and as low as 1.09, with a median of 1.67, all within the past year.
Additionally, Pfizer has a P/B ratio of 3.90 while its industry's price-to-book ratio sits at 6.38. For PFE, this valuation metric has been as high as 4.04, as low as 2.91, with a median of 3.20 over the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that H Lundbeck and Pfizer are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, HLUYY and PFE feels like a great value stock at the moment.
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H Lundbeck AS (HLUYY) : Free Stock Analysis Report
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