The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One stock to keep an eye on is Genmab (GMAB). GMAB is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
We also note that GMAB holds a PEG ratio of 2.09. 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. GMAB's PEG compares to its industry's average PEG of 2.79. Over the last 12 months, GMAB's PEG has been as high as 2.70 and as low as 0.50, with a median of 0.81.
Investors should also recognize that GMAB has a P/B ratio of 2.40. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. GMAB's current P/B looks attractive when compared to its industry's average P/B of 2.98. Over the past 12 months, GMAB's P/B has been as high as 4.22 and as low as 2.24, with a median of 3.30.
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. GMAB has a P/S ratio of 4.14. This compares to its industry's average P/S of 4.97.
Finally, we should also recognize that GMAB has a P/CF ratio of 10.40. 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 12.87. Within the past 12 months, GMAB's P/CF has been as high as 23.76 and as low as 9.68, with a median of 19.16.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Genmab is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, GMAB feels like a great value stock at the moment.
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Genmab A/S Sponsored ADR (GMAB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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