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Are These Medical Stocks Undervalued Right Now?

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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.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is GlaxoSmithKline (GSK - Free Report) . GSK is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 12.65, while its industry has an average P/E of 14.61. Over the last 12 months, GSK's Forward P/E has been as high as 14.45 and as low as 11.45, with a median of 13.09.

Another notable valuation metric for GSK is its P/B ratio of 3.68. The P/B ratio is used to compare a stock's market value with 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 6.36. Over the past 12 months, GSK's P/B has been as high as 3.95 and as low as 3.32, with a median of 3.59.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. GSK has a P/S ratio of 2.44. This compares to its industry's average P/S of 3.74.

Finally, our model also underscores that GSK has a P/CF ratio of 8.45. 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. GSK's current P/CF looks attractive when compared to its industry's average P/CF of 20.20. Over the past year, GSK's P/CF has been as high as 12.43 and as low as 7.86, with a median of 8.88.

Investors could also keep in mind H Lundbeck , an Large Cap Pharmaceuticals stock with a Zacks Rank of # 2 (Buy) and Value grade of A.

Furthermore, H Lundbeck holds a P/B ratio of 1.80 and its industry's price-to-book ratio is 6.36. HLUYY's P/B has been as high as 3.30, as low as 1.80, with a median of 2.25 over the past 12 months.

These are just a handful of the figures considered in GlaxoSmithKline and H Lundbeck's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that GSK and HLUYY is an impressive value stock right now.


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