Should Value Investors Buy Koninklijke Philips (PHG) Stock?
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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 Koninklijke Philips (PHG). PHG is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 15.86. This compares to its industry's average Forward P/E of 20.61. PHG's Forward P/E has been as high as 25.96 and as low as 9.44, with a median of 15.54, all within the past year.
PHG is also sporting a PEG ratio of 0.94. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. PHG's industry has an average PEG of 2.57 right now. PHG's PEG has been as high as 1.11 and as low as 0.85, with a median of 0.98, all within the past year.
Another valuation metric that we should highlight is PHG's P/B ratio of 1.56. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 4.26. PHG's P/B has been as high as 1.62 and as low as 0.67, with a median of 1.08, over the past year.
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. PHG has a P/S ratio of 1.06. This compares to its industry's average P/S of 1.71.
Smith & Nephew SNATS (SNN) may be another strong Medical - Products stock to add to your shortlist. SNN is a # 2 (Buy) stock with a Value grade of A.
Smith & Nephew SNATS is currently trading with a Forward P/E ratio of 14.59 while its PEG ratio sits at 1.29. Both of the company's metrics compare favorably to its industry's average P/E of 20.61 and average PEG ratio of 2.57.
SNN's price-to-earnings ratio has been as high as 19.03 and as low as 12.80, with a median of 16.41, while its PEG ratio has been as high as 3.26 and as low as 1.28, with a median of 2.09, all within the past year.
Furthermore, Smith & Nephew SNATS holds a P/B ratio of 2.25 and its industry's price-to-book ratio is 4.26. SNN's P/B has been as high as 2.72, as low as 1.77, with a median of 2.34 over the past 12 months.
These are only a few of the key metrics included in Koninklijke Philips and Smith & Nephew SNATS strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, PHG and SNN look like an impressive value stock at the moment.
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Koninklijke Philips N.V. (PHG) : Free Stock Analysis Report
Smith & Nephew SNATS, Inc. (SNN) : Free Stock Analysis Report
