Are Investors Undervaluing Perrigo (PRGO) Right Now?

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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 company value investors might notice is Perrigo (PRGO). PRGO is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 6.85, while its industry has an average P/E of 17.15. Over the past 52 weeks, PRGO's Forward P/E has been as high as 10.15 and as low as 6.81, with a median of 8.45.

Finally, investors will want to recognize that PRGO has a P/CF ratio of 11.25. 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. PRGO's current P/CF looks attractive when compared to its industry's average P/CF of 13.52. Over the past year, PRGO's P/CF has been as high as 24.93 and as low as 11.18, with a median of 21.03.

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

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This article originally published on Zacks Investment Research (zacks.com).

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