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Are Investors Undervaluing Sanofi (SNY) Right Now?

Zacks Equity Research

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 stock to keep an eye on is Sanofi (SNY). SNY is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 12.87 right now. For comparison, its industry sports an average P/E of 15.01. Over the past 52 weeks, SNY's Forward P/E has been as high as 14.20 and as low as 12.15, with a median of 13.12.

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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SNY has a P/S ratio of 2.61. This compares to its industry's average P/S of 4.12.

Finally, we should also recognize that SNY has a P/CF ratio of 11.36. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 15.80. Within the past 12 months, SNY's P/CF has been as high as 13.50 and as low as 10.62, with a median of 11.62.

These are only a few of the key metrics included in Sanofi's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SNY looks like an impressive value stock at the moment.


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