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Is AbbVie (ABBV) Stock Undervalued Right Now?

Zacks Equity Research

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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

AbbVie (ABBV) is a stock many investors are watching right now. ABBV is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 8.13, which compares to its industry's average of 14.19. Over the last 12 months, ABBV's Forward P/E has been as high as 11.61 and as low as 6.78, with a median of 8.98.

Investors will also notice that ABBV has a PEG ratio of 1.48. 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 industry has an average PEG of 1.78 right now. Within the past year, ABBV's PEG has been as high as 1.69 and as low as 0.67, with a median of 1.29.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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 3.38. This compares to its industry's average P/S of 3.76.

These figures are just a handful of the metrics value investors tend to look at, but they help show that AbbVie is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ABBV feels like a great value stock at the moment.


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