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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 company to watch right now is Takeda Pharmaceutical Co. (TAK). TAK is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value.
Another notable valuation metric for TAK is its P/B ratio of 1. 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 stock's P/B looks attractive against its industry's average P/B of 1.25. Over the past 12 months, TAK's P/B has been as high as 1 and as low as 0.79, with a median of 0.92.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. TAK has a P/S ratio of 1.69. This compares to its industry's average P/S of 3.16.
Finally, investors should note that TAK has a P/CF ratio of 7.78. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. TAK's P/CF compares to its industry's average P/CF of 9.72. Over the past 52 weeks, TAK's P/CF has been as high as 7.95 and as low as 5.84, with a median of 6.79.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Takeda Pharmaceutical Co. Is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TAK feels like a great value stock at the moment.
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Takeda Pharmaceutical Co. (TAK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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