Grifols shares fell by -7.02% during the day's afternoon session, and are now trading at a price of $8.54. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
Grifols, SA is dedicated to obtaining, manufacturing, preparing and selling therapeutic products, mainly blood derivatives. The company is headquartered in Barcelona, Spain. The company belongs to the Basic Materials sector, which has an average price to earnings (P/E) ratio of 10.03 and an average price to book (P/B) ratio of 2.08. In contrast, Grifols has a trailing 12 month P/E ratio of 85.45 and a P/B ratio of 0.8.
When we divide Grifols's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.409, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.