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Is Sanofi (SNY) Stock Undervalued Right Now?

Zacks.com logo Zacks.com 7/8/2021

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 to watch right now is Sanofi (SNY). SNY is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 12.64, while its industry has an average P/E of 14.77. Over the past 52 weeks, SNY's Forward P/E has been as high as 15.22 and as low as 11.75, with a median of 13.21.

We also note that SNY holds a PEG ratio of 1.29. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. SNY's industry has an average PEG of 1.75 right now. Within the past year, SNY's PEG has been as high as 2.07 and as low as 1.29, with a median of 1.74.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. SNY has a P/S ratio of 3.1. This compares to its industry's average P/S of 4.14.

Finally, we should also recognize that SNY has a P/CF ratio of 11.27. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 19.36. Over the past 52 weeks, SNY's P/CF has been as high as 11.89 and as low as 7.99, with a median of 10.70.

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

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