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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Grifols, S.A. (GRFS - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Grifols has a trailing twelve months PE ratio of 14.09, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.5. If we focus on the long-term PE trend, Grifols’ current PE level puts it above its midpoint over the past three years, with the number having risen rapidly over the past few months.
Further, the stock’s PE also compares favorably with the Zacks classified Medical – Drugs industry’s trailing twelve months PE ratio, which stands at 45.9. At the very least, this indicates that the stock is highly undervalued right now, compared to its peers.
We should also point out that Grifols has a forward PE ratio (price relative to this year’s earnings) of just 15.28, so it is fair to say that a slightly more value-oriented path may be ahead for Grifols stock in the near term too.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate).The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
Grifols’ PEG ratio stands at just 1.00, compared with the Zacks Medical – Drugs industry average of 2.78. This suggests a decent undervalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregate, Grifols currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Grifols a solid choice for value investors, and some of its other key metrics make this pretty clear too.
What About the Stock Overall?
Though Grifols might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘A’. This gives GRFS a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been favorable. Both the current quarter and the current year have seen one estimate go higher in the past sixty days compared to none lower in the same time period.
This has had just a positive impact on the consensus estimate as the current quarter consensus estimate has risen by 4.2% in the past two months, while the full year estimate has inched lower by 1.0%. You can see the consensus estimate trend and recent price actionfor the stock in the chart below:
This positive trend is the reason why the stock has just a Zacks Rank #2 (Buy) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Grifols is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front.
Boasting a good industry rank (top 35%) and a solid Zacks Rank, the company deserves attention right now. In fact, over the past two years, the Zacks Categorized Medical – Drugs industry has clearly over performed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
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Is Grifols a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Grifols, S.A. (GRFS - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Grifols has a trailing twelve months PE ratio of 14.09, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.5. If we focus on the long-term PE trend, Grifols’ current PE level puts it above its midpoint over the past three years, with the number having risen rapidly over the past few months.
Further, the stock’s PE also compares favorably with the Zacks classified Medical – Drugs industry’s trailing twelve months PE ratio, which stands at 45.9. At the very least, this indicates that the stock is highly undervalued right now, compared to its peers.
We should also point out that Grifols has a forward PE ratio (price relative to this year’s earnings) of just 15.28, so it is fair to say that a slightly more value-oriented path may be ahead for Grifols stock in the near term too.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate).The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
Grifols’ PEG ratio stands at just 1.00, compared with the Zacks Medical – Drugs industry average of 2.78. This suggests a decent undervalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregate, Grifols currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Grifols a solid choice for value investors, and some of its other key metrics make this pretty clear too.
What About the Stock Overall?
Though Grifols might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘A’. This gives GRFS a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been favorable. Both the current quarter and the current year have seen one estimate go higher in the past sixty days compared to none lower in the same time period.
This has had just a positive impact on the consensus estimate as the current quarter consensus estimate has risen by 4.2% in the past two months, while the full year estimate has inched lower by 1.0%. You can see the consensus estimate trend and recent price actionfor the stock in the chart below:
Grifols, S.A. Price and Consensus
Grifols, S.A. Price and Consensus | Grifols, S.A. Quote
This positive trend is the reason why the stock has just a Zacks Rank #2 (Buy) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Grifols is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front.
Boasting a good industry rank (top 35%) and a solid Zacks Rank, the company deserves attention right now. In fact, over the past two years, the Zacks Categorized Medical – Drugs industry has clearly over performed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
5 Trades Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>