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 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 Pfizer (PFE). PFE is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 7.71 right now. For comparison, its industry sports an average P/E of 14.81. PFE’s Forward P/E has been as high as 12.11 and as low as 7.71, with a median of 10.36, all within the past year.
PFE is also sporting a PEG ratio of 0.56. 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 1.14. Within the past year, PFE’s PEG has been as high as 1.24 and as low as 0.56, with a median of 0.97.
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. PFE has a P/S ratio of 2.02. This compares to its industry’s average P/S of 3.65.
Finally, investors will want to recognize that PFE has a P/CF ratio of 8.71. 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. PFE’s P/CF compares to its industry’s average P/CF of 22.72. Over the past 52 weeks, PFE’s P/CF has been as high as 43.59 and as low as 8.71, with a median of 15.02.
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.
