Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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 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 Teva Pharmaceutical Industries (TEVA). TEVA is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 6.87, while its industry has an average P/E of 12.42. 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.
We also note that TEVA holds a PEG ratio of 0.98. 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. TEVA's PEG compares to its industry's average PEG of 1.31. Within the past year, TEVA's PEG has been as high as 1.65 and as low as 0.76, with a median of 1.07.
Another valuation metric that we should highlight is TEVA's P/B ratio of 3.08. The P/B is a method of comparing a stock's market value to 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 3.96. Over the past year, TEVA's P/B has been as high as 4.64 and as low as 2.35, with a median of 3.11.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. TEVA has a P/S ratio of 1.64. This compares to its industry's average P/S of 3.2.
These are just a handful of the figures considered in Teva Pharmaceutical Industries's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that TEVA is an impressive value stock right now.
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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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