Is Perrigo (PRGO) Stock Undervalued Right Now?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is Perrigo (PRGO). PRGO 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 8.77. This compares to its industry's average Forward P/E of 22.45. Over the past year, PRGO's Forward P/E has been as high as 10.68 and as low as 7.66, with a median of 8.93.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. PRGO has a P/S ratio of 0.87. This compares to its industry's average P/S of 1.38.

Value investors will likely look at more than just these metrics, but the above data helps show that Perrigo is likely undervalued currently. And when considering the strength of its earnings outlook, PRGO sticks out at as one of the market's strongest value stocks.

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

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