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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 to watch right now is Takeda Pharmaceutical Co. (TAK). TAK is currently sporting a Zacks Rank #1 (Strong Buy) and an A for Value.
We should also highlight that TAK has a P/B ratio of 1.01. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.73. Over the past year, TAK's P/B has been as high as 1.07 and as low as 0.84, with a median of 0.98.
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. TAK has a P/S ratio of 1.97. This compares to its industry's average P/S of 3.18.
These are just a handful of the figures considered in Takeda Pharmaceutical Co.'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 TAK is an impressive value stock right now.
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Takeda Pharmaceutical Co. (TAK): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).