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.
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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 company to watch right now is AbbVie (ABBV - Free Report) . ABBV is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 8.50 right now. For comparison, its industry sports an average P/E of 16.10. Over the past year, ABBV's Forward P/E has been as high as 10.29 and as low as 5.96, with a median of 8.26.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. ABBV has a P/S ratio of 3.93. This compares to its industry's average P/S of 4.18.
Finally, our model also underscores that ABBV has a P/CF ratio of 12.77. 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. ABBV's P/CF compares to its industry's average P/CF of 16.51. Within the past 12 months, ABBV's P/CF has been as high as 25.71 and as low as 9.68, with a median of 16.24.
These are just a handful of the figures considered in AbbVie'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 ABBV is an impressive value stock right now.