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 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.
One company value investors might notice is Amgen (AMGN). AMGN is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
We also note that AMGN holds a PEG ratio of 2.40. 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. AMGN’s industry has an average PEG of 3.62 right now. AMGN’s PEG has been as high as 2.43 and as low as 1.76, with a median of 2.12, 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. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. AMGN has a P/S ratio of 4.93. This compares to its industry’s average P/S of 12.48.
Value investors will likely look at more than just these metrics, but the above data helps show that Amgen is likely undervalued currently. And when considering the strength of its earnings outlook, AMGN sticks out at as one of the market’s strongest value stocks.
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