Are Investors Undervaluing Grifols (GRFS) Right Now?

·2-min read

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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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.

Grifols (GRFS) is a stock many investors are watching right now. GRFS is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value.

Investors should also recognize that GRFS has a P/B ratio of 0.59. 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. This company's current P/B looks solid when compared to its industry's average P/B of 1.14. Within the past 52 weeks, GRFS's P/B has been as high as 1.05 and as low as 0.46, with a median of 0.70.

Finally, our model also underscores that GRFS has a P/CF ratio of 3.52. 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. GRFS's current P/CF looks attractive when compared to its industry's average P/CF of 9.50. Over the past year, GRFS's P/CF has been as high as 7.74 and as low as 3.52, with a median of 6.34.

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

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