Back to top

Image: Bigstock

Should Value Investors Buy Pfizer (PFE) 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.

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.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is Pfizer (PFE - Free Report) . PFE is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 7.24. This compares to its industry's average Forward P/E of 14.51. Over the last 12 months, PFE's Forward P/E has been as high as 12.11 and as low as 7.24, with a median of 9.42.

Investors will also notice that PFE has a PEG ratio of 0.80. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. PFE's PEG compares to its industry's average PEG of 1.26. PFE's PEG has been as high as 1.24 and as low as 0.53, with a median of 0.88, all within the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. PFE has a P/S ratio of 2.1. This compares to its industry's average P/S of 3.16.

Finally, investors should note that PFE has a P/CF ratio of 8.61. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. PFE's current P/CF looks attractive when compared to its industry's average P/CF of 21.31. Within the past 12 months, PFE's P/CF has been as high as 43.59 and as low as 8.34, with a median of 14.01.

These are only a few of the key metrics included in Pfizer's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, PFE looks like an impressive value stock at the moment.


See More Zacks Research for These Tickers


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


Pfizer Inc. (PFE) - free report >>

Published in