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Are Investors Undervaluing Sanofi (SNY) Right Now?

Zacks Equity Research

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

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.

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.

One company to watch right now is Sanofi (SNY). SNY is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 12.32, which compares to its industry's average of 14.26. 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.

We also note that SNY holds a PEG ratio of 1.78. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. SNY's PEG compares to its industry's average PEG of 1.82. Within the past year, SNY's PEG has been as high as 2.50 and as low as 1.74, with a median of 2.10.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. 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 2.49. This compares to its industry's average P/S of 3.94.

Finally, investors should note that SNY has a P/CF ratio of 11. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 14.13. Over the past year, SNY's P/CF has been as high as 13.50 and as low as 10.62, with a median of 11.54.

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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