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Are Investors Undervaluing Teva Pharmaceutical Industries (TEVA) Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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.

Teva Pharmaceutical Industries (TEVA - Free Report) is a stock many investors are watching right now. TEVA is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 6.53, while its industry has an average P/E of 10.10. Over the past 52 weeks, TEVA's Forward P/E has been as high as 7.17 and as low as 3.37, with a median of 5.64.

Another notable valuation metric for TEVA is its P/B ratio of 3. 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 solid versus its industry's average P/B of 3.94. Within the past 52 weeks, TEVA's P/B has been as high as 3.27 and as low as 1.21, with a median of 1.95.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. TEVA has a P/S ratio of 1.22. This compares to its industry's average P/S of 2.8.

Value investors will likely look at more than just these metrics, but the above data helps show that Teva Pharmaceutical Industries is likely undervalued currently. And when considering the strength of its earnings outlook, TEVA sticks out at as one of the market's strongest value stocks.


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