The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
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.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
Bausch Health (BHC - Free Report) is a stock many investors are watching right now. BHC is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 6.03 right now. For comparison, its industry sports an average P/E of 7.56. BHC's Forward P/E has been as high as 8.78 and as low as 4.59, with a median of 6.35, all within the past year.
Investors will also notice that BHC has a PEG ratio of 0.57. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BHC's PEG compares to its industry's average PEG of 1.16. Over the last 12 months, BHC's PEG has been as high as 0.62 and as low as 0.23, with a median of 0.33.
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. BHC has a P/S ratio of 1.01. This compares to its industry's average P/S of 2.96.
Value investors will likely look at more than just these metrics, but the above data helps show that Bausch Health is likely undervalued currently. And when considering the strength of its earnings outlook, BHC sticks out at as one of the market's strongest value stocks.