Are Investors Undervaluing Pfizer (PFE) Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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.
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 Pfizer (PFE). PFE is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 11.78, which compares to its industry's average of 19.65. PFE's Forward P/E has been as high as 19.41 and as low as 8.63, with a median of 11.11, all within the past year.
Investors should also note that PFE holds a PEG ratio of 1.10. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. PFE's industry currently sports an average PEG of 1.41. Over the past 52 weeks, PFE's PEG has been as high as 2.77 and as low as 0.86, with a median of 1.14.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. PFE has a P/S ratio of 3.12. This compares to its industry's average P/S of 4.7.
Finally, investors will want to recognize that PFE has a P/CF ratio of 27.93. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 29.11. Over the past year, PFE's P/CF has been as high as 28.70 and as low as 6.73, with a median of 18.45.
These are only a few of the key metrics included in Pfizer's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, PFE looks like an impressive value stock at the moment.
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