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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 company to watch right now is Viatris (VTRS). VTRS is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A.
Another notable valuation metric for VTRS is its P/B ratio of 0.75. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 2.13. Over the past year, VTRS's P/B has been as high as 0.81 and as low as 0.55, with a median of 0.70.
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 preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. VTRS has a P/S ratio of 1.33. This compares to its industry's average P/S of 1.4.
Finally, investors should note that VTRS has a P/CF ratio of 5.21. 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. VTRS's P/CF compares to its industry's average P/CF of 12.70. Over the past 52 weeks, VTRS's P/CF has been as high as 8.41 and as low as 4.30, with a median of 5.49.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Viatris is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, VTRS feels like a great value stock at the moment.
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Viatris Inc. (VTRS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).