Is AbbVie (ABBV) Stock Undervalued Right Now?
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.
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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One stock to keep an eye on is AbbVie (ABBV). ABBV is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 8.06. This compares to its industry's average Forward P/E of 16.06. Over the last 12 months, ABBV's Forward P/E has been as high as 10.29 and as low as 5.96, with a median of 8.13.
ABBV is also sporting a PEG ratio of 1.83. 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. ABBV's PEG compares to its industry's average PEG of 2.09. Within the past year, ABBV's PEG has been as high as 2.44 and as low as 1.26, with a median of 1.64.
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 3.95. This compares to its industry's average P/S of 4.16.
Finally, we should also recognize that ABBV has a P/CF ratio of 12.81. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 16.51. Over the past year, ABBV's P/CF has been as high as 25.71 and as low as 9.68, with a median of 16.14.
These are only a few of the key metrics included in AbbVie'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, ABBV looks like an impressive value stock at the moment.
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