Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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.
One company to watch right now is Teva Pharmaceutical Industries (TEVA). TEVA is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 6.87. This compares to its industry's average Forward P/E of 11.56. TEVA's Forward P/E has been as high as 8.91 and as low as 4.99, with a median of 6.47, all within the past year.
TEVA is also sporting a PEG ratio of 0.98. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. TEVA's PEG compares to its industry's average PEG of 1.32. Over the past 52 weeks, TEVA's PEG has been as high as 1.65 and as low as 0.76, with a median of 1.07.
Another notable valuation metric for TEVA is its P/B ratio of 3.08. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. TEVA's current P/B looks attractive when compared to its industry's average P/B of 3.59. TEVA's P/B has been as high as 4.64 and as low as 2.35, with a median of 3.11, over the past year.
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. TEVA has a P/S ratio of 1.34. This compares to its industry's average P/S of 3.74.
These are only a few of the key metrics included in Teva Pharmaceutical Industries's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, TEVA looks like an impressive value stock at the moment.
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Teva Pharmaceutical Industries Ltd. (TEVA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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