For investors looking for opportunities where a company's market price may not match its basic business condition, a systematic filtering process can be a helpful first step. One such method is to find stocks that seem fundamentally priced low while still showing good operational condition, earnings, and growth potential. This approach fits with central value investing ideas, which aim to find differences between a stock's price and its actual worth, but includes a check against weak companies by confirming the firm's basics are good. A "Decent Value" filter uses this thinking by selecting stocks with high valuation scores, meaning they are low-priced compared to important measures, together with good scores for financial condition, earnings, and growth.
Rigel Pharmaceuticals Inc (NASDAQ:RIGL) presents a strong example from such a filter. The clinical-stage biotechnology company, working on treatments for blood disorders and cancer, gets an overall basic score of 7 out of 10 from ChartMill. This number comes from a close look across five key areas: Valuation, Condition, Earnings, Growth, and Dividend. For a value investor, the notable point is the clear difference between its business results and its stock price.
A Very Strong Valuation Case
The main attraction of RIGL for a value-focused plan is its valuation score of 9 out of 10. The review indicates the stock is not only low-priced, but remarkably so compared to both its field and the wider market.
- Price-to-Earnings (P/E): At 6.61, RIGL's P/E ratio is called "very low." It is valued at a lower price than 98.68% of its biotechnology field competitors and is clearly different from the S&P 500's average P/E of 26.54.
- Forward P/E and Cash Flow: A forward P/E of 9.27 and a good Price/Free Cash Flow ratio give more support to the valuation case, with both measures rated better than almost all industry rivals.
- Growth Consideration: Even when including expected growth through the PEG ratio, the valuation stays appealing. The report states that while RIGL's high expected earnings growth could support a higher P/E, the current price does not show this.
This low valuation is the foundation of the chance. In value investing language, a low market price compared to earnings and cash flow hints at a possible safety buffer—if the basic business is steady.
Financial Condition and Business Soundness
A low price by itself is not a reason to buy; it must be combined with a business that is financially strong. This is where the "Decent Value" filter's need for condition and earnings is important to avoid weak companies. RIGL's Condition score of 7 shows a generally firm base.
- Solvency: The company has a very small debt-to-free-cash-flow ratio of 0.88, meaning it could pay off all its debt in under a year from its cash flow—a sign of high solvency that is better than 93.79% of the field.
- Liquidity: With a Current Ratio of 2.28 and a Quick Ratio of 2.14, RIGL has more than enough short-term assets to meet its near-term obligations.
- A Point of Attention: The review does note a poor Altman-Z score, which can signal financial pressure risk. However, this is mentioned as being similar to the field average, and the very strong cash flow compared to debt gives a meaningful offset.
Earnings and Growth: The Driver for Value to Appear
For the low-price difference to shrink, the company must be able to produce earnings and expand. RIGL's Earnings score of 6 and Growth score of 7 show it is not a still business.
- Notable Margins: The company has very good profit and operating margins (40.17% and 42.17%, respectively), doing better than most of its biotech peers. A gross margin above 93% shows firm pricing control for its products.
- Strong Recent Expansion: The last year has seen major growth, with Earnings Per Share rising by over 4,300% and Revenue going up by 79.13%. This is not a company shrinking.
- Continued Future View: Experts think this movement will keep going, though at a more standard speed, with forward yearly EPS growth estimated near 37% and Revenue growth around 15.7%.
This pairing is essential. Good earnings support future growth and strengthen the balance sheet, while the growth path gives a reason that could lead the market to price the stock higher, thus making the value chance real.
Summary
Rigel Pharmaceuticals represents the kind of chance a "Decent Value" filter is made to find: a company selling at a large markdown to its earnings ability while showing firm financial condition, high earnings, and a good growth outline. The low P/E ratios suggest the market may be pricing low its recent business results and future product potential. For investors using a value approach, RIGL provides the numerical signs of a low-priced security—a low price relative to basics—combined with the non-numerical confidence that the business itself seems to be on a firm and expanding base.
Interested in finding more stocks that fit this outline? You can use the "Decent Value" filter yourself to see other possible chances by clicking here.
Disclaimer: This article is for information only and is not financial advice, a suggestion, or an offer or request to buy or sell any securities. The review is based on data given by ChartMill, and investors should do their own research and talk with a qualified financial advisor before making any investment choices. Past results do not guarantee future outcomes.
