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Are Investors Undervaluing Takeda Pharmaceutical Co. (TAK) Right Now?

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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.

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 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 company to watch right now is Takeda Pharmaceutical Co. (TAK - Free Report) . TAK is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.

Another valuation metric that we should highlight is TAK's P/B ratio of 1.10. 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 1.17. Over the past year, TAK's P/B has been as high as 1.15 and as low as 0.80, with a median of 0.90.

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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. TAK has a P/S ratio of 1.64. This compares to its industry's average P/S of 3.95.

Finally, we should also recognize that TAK has a P/CF ratio of 7.70. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 9.76. Within the past 12 months, TAK's P/CF has been as high as 8.05 and as low as 4.70, with a median of 6.91.

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


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