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Is Teva Pharmaceutical Industries Ltd (TEVA) Stock Undervalued Right Now?

Zacks Equity Research

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.

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 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.

One company value investors might notice is Teva Pharmaceutical Industries Ltd (TEVA). TEVA is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 4.63, while its industry has an average P/E of 9.10. TEVA's Forward P/E has been as high as 5.88 and as low as 2.50, with a median of 3.74, all within the past year.

We also note that TEVA holds a PEG ratio of 0.97. 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. TEVA's PEG compares to its industry's average PEG of 1.13. Over the last 12 months, TEVA's PEG has been as high as 2.59 and as low as 0.56, with a median of 0.89.

Another notable valuation metric for TEVA is its P/B ratio of 0.86. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. TEVA's current P/B looks attractive when compared to its industry's average P/B of 1.32. Over the past year, TEVA's P/B has been as high as 0.98 and as low as 0.44, with a median of 0.66.

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


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