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.
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.
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 Pfizer (PFE). PFE is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 7.69. This compares to its industry's average Forward P/E of 14.70. PFE's Forward P/E has been as high as 12.11 and as low as 7.15, with a median of 9.16, all within the past year.
We also note that PFE holds a PEG ratio of 0.85. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. PFE's industry currently sports an average PEG of 1.28. Over the last 12 months, PFE's PEG has been as high as 1.24 and as low as 0.53, with a median of 0.84.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. PFE has a P/S ratio of 2.11. This compares to its industry's average P/S of 3.25.
Finally, investors will want to recognize that PFE has a P/CF ratio of 9.12. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 21.53. Over the past year, PFE's P/CF has been as high as 43.59 and as low as 8.34, with a median of 13.42.
Value investors will likely look at more than just these metrics, but the above data helps show that Pfizer is likely undervalued currently. And when considering the strength of its earnings outlook, PFE sticks out at as one of the market's strongest value stocks.
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Pfizer Inc. (PFE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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