Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 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.

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6 Undervalued Pharmaceuticals Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 6 undervalued stocks in the Pharmaceuticals industry for Monday, May 22, 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 83, which is considered to be undervalued.

When you look at Amneal Pharmaceuticals Inc’s price-to-sales ratio at 0.15 compared to the industry median at 3.04, 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 11.1, 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 (2.89%). 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 1.70. 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 18.31. 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.

Natural Alternatives International, Inc.’s Value Grade

Value Grade:

Natural Alternatives International, Inc. is a formulator, manufacturer, and marketer of nutritional supplements. The Company’s segments include private-label contract manufacturing, and patent and trademark licensing. Private-label contract manufacturing segment is engaged in the provision of private-label contract manufacturing services to companies that market and distribute vitamins, minerals, herbal, nutritional supplements, and other health care products. Patent and trademark licensing segment owns a patent estate related to the raw material ingredient known as beta-alanine, which is primarily commercialized through the direct sale of this raw material and supply agreements with third parties for the distribution and use of this raw material under its CarnoSyn and SR CarnoSyn trademarks. Its private-label contract manufacturing products are sold in the United States, Europe, Australia, Asia, Mexico, and 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.

Natural Alternatives International, Inc. has a Value Score of 98, which is considered to be undervalued.

Natural Alternatives International, Inc.’s price-earnings ratio is 5.4 compared to the industry median at 19.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Natural Alternatives International, Inc. more attractive for value investors.

Natural Alternatives International, Inc.’s price-to-book ratio is higher than its peers. This could make Natural Alternatives International, Inc. less attractive for value investors when compared to the industry median at 1.70.

You can read more about Natural Alternatives International, 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.

Perrigo Company PLC’s Value Grade

Value Grade:

Perrigo Company plc is an Ireland-based provider of over the counter (OTC) health and wellness solutions that are designed to enhance individual well-being. The Company's segments include Consumer Self-Care Americas (CSCA) and Consumer Self-Care International (CSCI). The CSCA segment comprises its consumer self-care business (OTC, infant formula, and oral care categories, and contract manufacturing) in the United States and Canada, including the HRA Pharma self-care business (Women's Health and Skin-Care categories) in the United States and Canada. The CSCI segment comprises its consumer self-care business in Europe and Australia, which are primarily branded, its store brand business in the United Kingdom and parts of Europe and Asia and includes the HRA Pharma self-care business (Women's Health, Skin-Care and Rare-Disease categories) in Europe. Its product categories include Upper Respiratory, Pain and Sleep-Aids, Skincare and Personal Hygiene, Digestive Health, Nutrition and others.

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.

Perrigo Company PLC has a Value Score of 62, which is considered to be undervalued.

Perrigo Company PLC’s price-to-book ratio is higher than its peers. This could make Perrigo Company PLC less attractive for value investors when compared to the industry median at 1.70.

You can read more about Perrigo Company PLC’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.

Qilian International Holding Group Ltd’s Value Grade

Value Grade:

Qilian International Holding Group Ltd is a China-based company mainly engaged in the development, manufacture, marketing and sale of licorice products, oxytetracycline products, traditional Chinese medicine derivatives (TCMD) product, heparin product, sausage casings and fertilizers. The Company operates through three segments: Oxytetracycline & Licorice Products and TCMD segment, Fertilizer segment and Heparin Products and Sausage Casing segment. Its main brand is Qilian Shan. The Company principally operates its businesses within the domestic market.

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.

Qilian International Holding Group Ltd has a Value Score of 67, which is considered to be undervalued.

Qilian International Holding Group Ltd’s price-earnings ratio is 29.9 compared to the industry median at 19.2. This means that it has a higher price relative to its earnings compared to its peers. This makes Qilian International Holding Group Ltd less attractive for value investors.

Qilian International Holding Group Ltd’s price-to-book ratio is higher than its peers. This could make Qilian International Holding Group Ltd less attractive for value investors when compared to the industry median at 1.70.

You can read more about Qilian International Holding Group Ltd’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.

Sunshine Biopharma Inc’s Value Grade

Value Grade:

Sunshine Biopharma, Inc. is a Canada-based pharmaceutical company that is focused on the research, development and commercialization of oncology and antiviral drugs. The Company’s drug development operations include SBFM-PL4 Anti-Coronavirus Treatment and Adva-27a Anticancer Drug. The Company’s drug development activities are focused on the development of a small molecule called Adva-27a for the treatment of aggressive forms of cancer. A Topoisomerase II inhibitor, Adva-27a has been shown to be effective at destroying Multidrug Resistant Cancer cells, including pancreatic cancer cells, breast cancer cells, small-cell lung cancer cells and uterine sarcoma cells. The Company, through its subsidiary, Sunshine Biopharma Canada Inc. (Sunshine Canada), develops science-based nutritional supplements. Its product includes Essential 9 a nutritional supplement tablets, which is comprised of the nine essential amino acids for human body.

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.

Sunshine Biopharma Inc has a Value Score of 61, which is considered to be undervalued.

Sunshine Biopharma Inc’s price-to-book ratio is higher than its peers. This could make Sunshine Biopharma Inc less attractive for value investors when compared to the industry median at 1.70.

You can read more about Sunshine 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.

Sunwin Stevia International Inc’s Value Grade

Value Grade:

Sunwin Stevia International, Inc. sells stevioside, a natural sweetener, and herbs used in traditional Chinese medicines and veterinary products. The Company operates through two segments related to its product lines: Stevioside, which produces and sells a range of purified steviol glycosides with rebaudioside A and stevioside as the principal components; a natural, low calorie sweetener, and OnlySweet, a stevioside-based table top sweetener, and Chinese medicines, which manufactures and sells traditional Chinese medicine formula extracts, which are used in products made for use by both humans and animals. The Company engages in new product development both through its internal research facilities, industry consultants and specialists to provide research and development for the planting of stevia plants, for the development of biological methods to improve lower-grade stevia product to higher-grade stevia, and for the application of biological method to change the taste of stevia.

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.

Sunwin Stevia International Inc has a Value Score of 98, which is considered to be undervalued.

Sunwin Stevia International Inc’s price-to-book ratio is higher than its peers. This could make Sunwin Stevia International Inc less attractive for value investors when compared to the industry median at 1.70.

You can read more about Sunwin Stevia International 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 6 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.
• Natural Alternatives International, Inc. stock has a Value Grade of A.
• Perrigo Company PLC stock has a Value Grade of B.
• Qilian International Holding Group Ltd stock has a Value Grade of B.
• Sunshine Biopharma Inc stock has a Value Grade of B.
• Sunwin Stevia International Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 6 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.

• 6 Undervalued Pharmaceuticals Stocks for Monday, May 22
• 6 Undervalued Pharmaceuticals Stocks for Friday, May 19
• Is Evofem Biosciences Inc (EVFMD) Stock a Good Investment?
• Why Catalent Inc’s (CTLT) Stock Is Up 15.65%

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