Should Value Investors Buy Perrigo (PRGO) Stock?

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.

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

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.

Perrigo (PRGO) is a stock many investors are watching right now. PRGO is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 8.4, which compares to its industry's average of 20.84. Over the past 52 weeks, PRGO's Forward P/E has been as high as 10.15 and as low as 7.66, with a median of 8.76.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. PRGO has a P/S ratio of 0.84. This compares to its industry's average P/S of 1.36.

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

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

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