Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 7 stocks made the list for top value stocks in the Pharmaceuticals industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Latest Pharmaceuticals Stock News

Before choosing which top Pharmaceuticals stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

The outlook for the Pharmaceuticals sub-industry is positive as the world returns to normalcy and demand for electives and improved medical utilization. COVID-19 therapies, oncology and immunology are essential aspects of pharmaceutical companies. Should COVID-19 variants continue to arise getting a COVID-19 vaccine could become a seasonal phenomenon, much like the flu vaccine. If that were to happen, it would prove to be very lucrative for pharmaceutical companies, as it would generate recurring sales. Recent FDA recommendations, such as approval for a fourth booster dose for those aged 50 or older, suggests we may be moving in this direction. Generic drug makers are expected to continue to struggle due to lower-cost emerging market competition. Despite this, policy risks are on the rise. Lowering drug prices continues to be a bipartisan issue as both parties aim to offer Americans more affordable prices. While this provides uncertainty in the long-term, it is unlikely that legislation will get passed in the near future due to more pressing issues in the political agenda. Year to date through June 3, the S&P Pharmaceuticals Index was up 1.5% vs. a 13.6% decline for the S&P Composite 1500 Index. In 2021, the S&P Pharmaceuticals Index returned a gain of 21.8%, vs. a gain of 26.7% for the S&P Composite 1500.

Why Focus on Undervalued Pharmaceuticals Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

Click the button below to learn more about A+ Investor and subscribe today.

7 Undervalued Pharmaceuticals Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 7 undervalued stocks in the Pharmaceuticals industry for Thursday, May 18, 2023. Let’s take a closer look at their individual scores to see how they measure up against each other and the Pharmaceuticals industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Amneal Pharmaceuticals Inc’s Value Grade

Value Grade:

Amneal Pharmaceuticals, Inc. is a pharmaceutical company. The Company specializes in developing, manufacturing, marketing and distributing generic, injectables, biosimilars and branded specialty pharmaceutical products. Its segments include Generics, Specialty, and AvKARE. Its Generics segment includes approximately 250 product families covering a range of dosage forms and delivery systems, including both immediate and extended-release oral solids, powders, liquids, sterile injectables, nasal sprays, inhalation and respiratory products, biosimilar products, ophthalmics, films, transdermal patches and topicals. Its Specialty segment is engaged in the development, promotion, sale and distribution of branded pharmaceutical products, with a focus on products addressing central nervous system (CNS) disorders, including Parkinson?s disease, and endocrine disorders. Its AvKARE segment provides pharmaceuticals, medical and surgical products, and services primarily to governmental agencies.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Amneal Pharmaceuticals Inc has a Value Score of 84, which is considered to be undervalued.

When you look at Amneal Pharmaceuticals Inc’s price-to-sales ratio at 0.14 compared to the industry median at 2.97, this company has a lower price relative to revenue compared to its peers. This could make Amneal Pharmaceuticals Inc’s stock more attractive for value investors.

Now, let’s assess Amneal Pharmaceuticals Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 6.3, when compared to the industry median of 10.7, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Amneal Pharmaceuticals Inc’s shareholder yield is higher than its industry median ratio of (2.70%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Amneal Pharmaceuticals Inc’s price-to-book ratio is lower than its industry median ratio of 1.65. This could make Amneal Pharmaceuticals Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Amneal Pharmaceuticals Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Amneal Pharmaceuticals Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 19.10. This could make Amneal Pharmaceuticals Inc more attractive because the lower P/FCF ratio indicates that Amneal Pharmaceuticals Inc is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Aytu Biopharma Inc’s Value Grade

Value Grade:

Aytu BioPharma, Inc. is a pharmaceutical company. The Company is focused on commercializing therapeutics and consumer health products and developing therapeutics for rare pediatric-onset or difficult-to-treat diseases. It manufactures its products for the treatment of attention deficit hyperactivity disorder (ADHD) at its manufacturing facilities and uses third party manufacturers for its other prescription and consumer health products. The Company operates through two business segments: BioPharma and Consumer Health. The BioPharma segment consists of prescription pharmaceutical products (the Rx Portfolio). The Consumer Health segment consists of various consumer healthcare products (the Consumer Health Portfolio). The Company also has two product candidates in development, AR101 (enzastaurin) for the treatment of vascular Ehlers-Danlos Syndrome (VEDS) and Healight (endotracheal ultraviolet light catheter) for the treatment of severe, difficult-to-treat respiratory infections.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Aytu Biopharma Inc has a Value Score of 75, which is considered to be undervalued.

Aytu Biopharma Inc’s price-to-book ratio is higher than its peers. This could make Aytu Biopharma Inc less attractive for value investors when compared to the industry median at 1.65.

You can read more about Aytu Biopharma Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Clever Leaves Holdings Inc’s Value Grade

Value Grade:

Clever Leaves Holdings Inc. is a holding company. The Company is focused on cultivating, extracting and selling cannabinoids. The Company operates through two segments: Cannabinoid and Non-Cannabinoid segments. The Cannabinoid operating segment consists of the Company’s cultivation, extraction, manufacturing, commercialization, and distribution of cannabinoid products. The Non-Cannabinoid segment is engaged in the non-cannabinoid business of manufacturing and selling homeopathic and other natural remedies, wellness products, and nutraceuticals, through its wholly owned subsidiary Herbal Brands, Inc. (Herbal Brands). Its principal customers for the Herbal Brands products include specialty and health retailers, mass retailers, and specialty and health stores in the United States. The Company operates primarily in Colombia, Portugal, Germany, and the United States.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Clever Leaves Holdings Inc has a Value Score of 63, which is considered to be undervalued.

Clever Leaves Holdings Inc’s price-to-book ratio is higher than its peers. This could make Clever Leaves Holdings Inc less attractive for value investors when compared to the industry median at 1.65.

You can read more about Clever Leaves Holdings Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Eagle Pharmaceuticals Inc’s Value Grade

Value Grade:

Eagle Pharmaceuticals, Inc. is a fully integrated pharmaceutical company with research and development, clinical, manufacturing and commercial capabilities. The Company is focused on developing medicines that result in improvements in patients' lives. The Company's commercialized products include vasopressin, PEMFEXY, RYANODEX, BENDEKA, BELRAPZO, TREAKISYM (Japan), and BYFAVO and BARHEMSYS through its wholly owned subsidiary Acacia Pharma Inc. Its oncology and central nervous system (CNS)/metabolic critical care pipeline includes product candidates with the potential to address underserved therapeutic areas across multiple disease states. The Company also has a research and development facility in Cambridge, Massachusetts. The Company has office space in Palm Beach Gardens, Florida and Indianapolis, Indiana. The Company?s subsidiaries include Eagle Biologics, Inc., Eagle Research Lab Limited, Acacia Pharma Group plc, Acacia Pharma Limited and Acacia Pharma Inc.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Eagle Pharmaceuticals Inc has a Value Score of 67, which is considered to be undervalued.

Eagle Pharmaceuticals Inc’s price-to-book ratio is higher than its peers. This could make Eagle Pharmaceuticals Inc less attractive for value investors when compared to the industry median at 1.65.

You can read more about Eagle Pharmaceuticals Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Elite Pharmaceuticals Inc’s Value Grade

Value Grade:

Elite Pharmaceuticals, Inc. is a specialty pharmaceutical company that develops niche generic products. The Company is engaged in developing and manufacturing oral, controlled-release drug products. The Company owns multiple generic products which have been licensed to Lannett Company, Prasco, LLC, Epic Pharma, LLC, and TAGI Pharma. The Company’s segments include Abbreviated New Drug Applications (ANDA) and New Drug Application (NDA). The Company’s products include Phentermine HCl 37.5 milligram tablets (mg), Phendimetrazine Tartrate 35mg tablets, Phentermine HCl 15mg and 30mg capsules, Dantrolene 25mg, Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, Dextroamphetamine Saccharate, Amphetamine Aspartate, Amphetamine Sulfate Immediate Release 5mg, Trimipramine Maleate Immediate Release 25mg, 50mg and 100mg capsules, Oxycodone HCl Immediate Release 5mg, 10mg, 15mg, 20mg and 30mg tablets, Isradipine 2.5mg and 5mg capsules and Naltrexone HCl 50mg tablets.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Elite Pharmaceuticals Inc has a Value Score of 83, which is considered to be undervalued.

Elite Pharmaceuticals Inc’s price-earnings ratio is 4.5 compared to the industry median at 18.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Elite Pharmaceuticals Inc more attractive for value investors.

Elite Pharmaceuticals Inc’s price-to-book ratio is higher than its peers. This could make Elite Pharmaceuticals Inc less attractive for value investors when compared to the industry median at 1.65.

You can read more about Elite Pharmaceuticals Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

PetIQ Inc’s Value Grade

Value Grade:

PetIQ, Inc. is a pet medication and wellness company, which provides veterinary products and services. The Company is engaged with customers through approximately 60,000 points of distribution across retail and e-commerce channels. The Company has two segments: Products and Services. Products segment manufactures and distributes pet medication and health and wellness products to the retail and e-commerce channels. It is focused its offerings on value-branded products, and third-party branded products for dogs and cats, including pet Rx medications, OTC medications, and wellness products. It offers and supplies these products to customers primarily in the United States. Services segment provides a comprehensive suite of services at approximately 2,600 community clinic locations and wellness centers hosted at retailers across 41 states. The segment?s services include diagnostic tests, vaccinations, prescription medications, microchipping, grooming and hygiene and wellness checks.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

PetIQ Inc has a Value Score of 69, which is considered to be undervalued.

PetIQ Inc’s price-to-book ratio is lower than its peers. This could make PetIQ Inc fairly attractive for value investors when compared to the industry median at 1.65.

You can read more about PetIQ Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

SNDL Inc’s Value Grade

Value Grade:

SNDL Inc. is a Canada-based private sector liquor and cannabis retailer with retail banners that include Ace Liquor, Wine and Beyond, Liquor Depot, Value Buds, and Spiritleaf. It operates through four segments: Liquor Retail, Cannabis Retail, Cannabis Operations, and Investments. The Liquor Retail segment includes the sale of wines, beers and spirits through wholly owned liquor stores. The Cannabis Retail segment includes the private sale of recreational cannabis through wholly owned and franchise retail cannabis stores. The Cannabis Operations segment include the cultivation, distribution and sale of cannabis for the adult-use market and medical markets in Canada. The Investments segment include the deployment of capital to investment opportunities. It cannabis brand portfolio includes Top Leaf, Sundial Cannabis, Palmetto, Spiritleaf Selects, Grasslands, Versus Cannabis, Value Buds, Vacay and Grasslands. It operates over 180 multi-banner cannabis retail store network in Canada.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

SNDL Inc has a Value Score of 64, which is considered to be undervalued.

SNDL Inc’s price-to-book ratio is higher than its peers. This could make SNDL Inc less attractive for value investors when compared to the industry median at 1.65.

You can read more about SNDL Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Pharmaceuticals Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Pharmaceuticals stocks as well as other industrys.

Choosing Which of the 7 Best Pharmaceuticals Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Amneal Pharmaceuticals Inc stock has a Value Grade of A.
• Aytu Biopharma Inc stock has a Value Grade of B.
• Clever Leaves Holdings Inc stock has a Value Grade of B.
• Eagle Pharmaceuticals Inc stock has a Value Grade of B.
• Elite Pharmaceuticals Inc stock has a Value Grade of A.
• PetIQ Inc stock has a Value Grade of B.
• SNDL Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 7 undervalued stocks in the Pharmaceuticals industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Pharmaceuticals Stocks

Want to learn more about Pharmaceuticals stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 7 Undervalued Pharmaceuticals Stocks for Thursday, May 18
• 5 Undervalued Pharmaceuticals Stocks for Wednesday, May 17
• Why Bausch Health Companies Inc’s (BHC) Stock Is Up 24.09%
• Why Horizon Therapeutics PLC’s (HZNP) Stock Is Up 4.33%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.