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Should Value Investors Buy Royal Philips (PHG) Stock?

Zacks Equity Research

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.

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.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Royal Philips (PHG) is a stock many investors are watching right now. PHG is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 16.79, which compares to its industry's average of 19.35. PHG's Forward P/E has been as high as 23.71 and as low as 13.49, with a median of 19.37, all within the past year.

PHG is also sporting a PEG ratio of 1.49. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. PHG's PEG compares to its industry's average PEG of 1.51. Over the last 12 months, PHG's PEG has been as high as 1.85 and as low as 1.14, with a median of 1.32.

These are only a few of the key metrics included in Royal Philips'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, PHG looks like an impressive value stock at the moment.


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Zacks Investment Research