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Should Value Investors Buy Teva Pharmaceutical Industries Ltd. (TEVA) Stock?

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.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 Teva Pharmaceutical Industries Ltd. (TEVA). TEVA is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 3.19. This compares to its industry's average Forward P/E of 8.24. Over the last 12 months, TEVA's Forward P/E has been as high as 8.43 and as low as 2.50, with a median of 5.84.

TEVA is also sporting a PEG ratio of 0.75. 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. TEVA's industry currently sports an average PEG of 1.63. Over the past 52 weeks, TEVA's PEG has been as high as 7.15 and as low as 0.59, with a median of 1.86.

Another notable valuation metric for TEVA is its P/B ratio of 0.57. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.09. Over the past year, TEVA's P/B has been as high as 1.58 and as low as 0.44, with a median of 0.94.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Teva Pharmaceutical Industries Ltd. Is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TEVA feels like a great value stock at the moment.


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