Are Investors Undervaluing Innoviva (INVA) Right Now?
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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 Innoviva (INVA). INVA 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 7.40. This compares to its industry's average Forward P/E of 15.61. Over the past year, INVA's Forward P/E has been as high as 11.29 and as low as 7.03, with a median of 8.74.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. INVA has a P/S ratio of 2.56. This compares to its industry's average P/S of 4.38.
Finally, we should also recognize that INVA has a P/CF ratio of 10.38. 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 stock's P/CF looks attractive against its industry's average P/CF of 15.35. Over the past year, INVA's P/CF has been as high as 12.22 and as low as 4.01, with a median of 6.94.
Another great Large Cap Pharmaceuticals stock you could consider is Merck & Co. (MRK), which is a # 2 (Buy) stock with a Value Score of A.
Merck & Co. is trading at a forward earnings multiple of 13.83 at the moment, with a PEG ratio of 1.36. This compares to its industry's average P/E of 15.61 and average PEG ratio of 1.40.
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