Back to top

Image: Bigstock

Should Value Investors Buy Innoviva (INVA) Stock?

Read MoreHide Full Article

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.

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 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 Innoviva (INVA - Free Report) . INVA is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 7.11, which compares to its industry's average of 16.02. Over the last 12 months, INVA's Forward P/E has been as high as 12 and as low as 5.73, with a median of 8.42.

Another notable valuation metric for INVA is its P/B ratio of 2.32. The P/B ratio pits a stock's market value against 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 6.69. INVA's P/B has been as high as 5.06 and as low as 1.77, with a median of 2.88, over the past year.

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. INVA has a P/S ratio of 3.9. This compares to its industry's average P/S of 4.37.

Finally, investors should note that INVA has a P/CF ratio of 5.84. 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. This stock's P/CF looks attractive against its industry's average P/CF of 15.31. Within the past 12 months, INVA's P/CF has been as high as 9.79 and as low as 4.08, with a median of 6.38.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Innoviva is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, INVA feels like a great value stock at the moment.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Innoviva, Inc. (INVA) - free report >>

Published in