Here’s why Astrazeneca is one of the most expensive shares on the market

Here’s why Astrazeneca is one of the most expensive shares on the market

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It has long been understood that cheap stocks have a tendency to outperform expensive stocks in the stock market. While this is not true every single year, over almost every 3-year cycle in the stock market, cheap (or value) stocks outperform. This phenomenon has created the cult of 'Value Investing' born of the writings of Benjamin Graham and the amazing success of its arch proponent Warren Buffett.

On an extremely long-term, multi-decade view, value is perhaps the only filter through which to think about stocks. Of course, with average investors holding stocks for less than a year, plenty of other factors come into play during that timeframe. Nevertheless, when we are researching a stock, we can’t ignore whether it is cheap or expensive.

According to Stockopedia’s calculations, Astrazeneca (LON:AZN) is very expensive. Here's why.

Breaking down Astrazeneca’s low Value Rank

One of the masters of value (and factor) investing is Jim O'Shaughnessy, the founder of O’Shaughnessy Asset Management (OSAM). In the 4th edition of his groundbreaking investment research tome What Works on Wall St, O’Shaughnessy shows that composite value factors based on a mix of metrics dramatically beat the market over a multi-decade period.

It was from this powerful insight that Stockopedia’s Value Rank was born. We can see it in action. Astrazeneca has a:

  • Trailing twelve-month price price to book value of 9.77,
  • Rolling price to earnings ratio of 49.1,
  • Trailing twelve-month price to free cash flow of 252,
  • Rolling dividend yield of 2.95%, and a
  • Trailing twelve-month price to sales ratio of 5.26...

When compared to other stocks in the market, this makes for a Value Rank of just 13.


What does this mean for potential investors?

Some of the best quality stocks in the market have defensible models that can deliver high levels of shareholder returns over the long term. But there are no guarantees and it's important to do your own research. Indeed, we've identified some areas of concern with AstraZeneca that you can find out about here.


About us

Stockopedia helps individual investors make confident, profitable choices in the stock market. Our StockRank and factor investing toolbox unlocks institutional-quality insights into thousands of global stocks. Voted “Best Investment Research Tools” and “Best Research Service” at the 2021 UK Investor Magazine awards.

AstraZeneca's StockRank™

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AstraZeneca's StockRank™

With a StockRank of 38, AstraZeneca is in the bottom 38% of the 7,586 stocks we cover in Europe, according to our proprietary ranking system.

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