Arguably one of the toughest things to do as an investor is find value in a stock market that continues to hit new highs. Of course, value is in the eye of the beholder, and there are more metrics that can measure value today than there were, say, 10 or 20 years ago.

However, if there is one metric that's stood the test of time on the value front, it's the price-to-earnings ratio. Comparing a company's per-share profits to its share price (the P/E ratio), then comparing the P/E ratio to the company's historical P/E ratio and the average P/E ratio of the industry it's part of, can give investors a clue as to whether a company might be a good value.

While there are plenty of brand-name companies valued at reasonably low current and forward P/E ratios ("forward" meaning the P/E ratio based on next fiscal year's estimated earnings per share (EPS)), it's interestingly the healthcare sector that's home to three of the most unimaginable low P/E ratios that you'll come across. But as you'll see, while these low P/E ratios may offer value, they're often low for a very good reason.

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Mallinckrodt: 2019 P/E of 1

Trust me, most folks would do a double take if you told them that there's a stock out there that recently upped its full-year earnings forecast to $8.30 to $8.60 per share but closed this past weekend at $8.59 a share. This "ultra-value stock" is Mallinckrodt (NYSE:MNK), and it really is valued at only one times this year's forecast EPS.

How on earth does a company trade for such a low multiple and not rally? That's the quirk that bears some digging.

For years, Acthar Gel has been Mallinckrodt's workhorse drug. Acthar Gel has well over one dozen indications that it's approved for, which the company anticipates will lead to more than $1 billion in 2019 sales. But the drug, which is most notably used to treat infantile spasms and multiple sclerosis, is also at the center of a drug pricing debate. In 2007, Questcor, which Mallinckrodt acquired in 2014, hiked the price per vial of Acthar Gel to $23,000 from $2,000. As of April, a vial cost $38,892, and it's faced plenty of pushback (and lawsuits) from the federal government over this price hike. Sales of Mallinckrodt's top drug declined just over 8% in the first quarter from the year-ago period. 

Acquiring new products has also buried Mallinckrodt under a mountain of debt. Although it's made progress in utilizing its operating cash flow to pay down debt, Mallinckrodt still ended the first quarter with $5.82 billion in long-term debt and just $226 million in cash and cash equivalents.

Furthermore, a deeper dive beyond the headline figures shows that while Mallinckrodt did indeed report net income of almost $155 million in the first quarter on $790.6 million in net sales, it received an income tax benefit of $204.7 million. The company's operating income was a mere $15.4 million, and it would have lost money had it not been for this income tax benefit. 

With Wall Street analysts expressing uncertainty over the company's plans to spin off its specialty generics division, which will include Amitiza, its current P/E of only 1 may be justified.

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Endo International: 2019 P/E of 1.9

Another drug company that'll have jaws dropping is Endo International (NASDAQ:ENDP) with its P/E ratio of less than 2. Contained within the company's first-quarter operating results is its forecast for $2 to $2.25 in full-year adjusted EPS. For context, Endo International closed at $4.10 per share this past Friday.

How the heck does a company get beaten down so badly that it trades at a multiple of less than two times current-year profit projections? Well, like Mallinckrodt, it's really a story about lawsuits and debt.

Endo had to pay the piper two years ago when it set aside an additional $775 million to cover more than 22,000 lawsuits stemming its line of vaginal mesh products. These products were acquired when Endo purchased American Medical Systems in June 2011. But this added settlement pushed the company's total cumulative liability to north of $3 billion. 

Though Endo is beginning to put its mesh lawsuits in the rearview mirror, it's now contending with a host of opioid-related lawsuits. Some of you may recall that Endo's Opana ER, a Food and Drug Administration (FDA)-approved opioid painkiller, became the first approved drug to be taken off pharmacy shelves by the FDA due to abuse risks back in 2017. Suffice it to say, there's a lot of uncertainty surrounding financial culpability with these opioid suits. 

This is also a company that's swimming in debt. Despite ending the first quarter with $981.7 million in cash and cash equivalents, and paying down close to $120 million in debt, Endo is still lugging around $8.08 billion in long-term debt. Sure, the company continues to make money on an adjusted basis, but it actually lost money on a GAAP basis. 

Considering Endo International's sales growth has been tepid at best, and it's facing a number of legal issues, it, too, looks to have rightly earned its low P/E ratio.

An investor holding a magnifying glass over a company's balance sheet.

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Teva Pharmaceutical Industries: 2019 P/E of 3.9

More than likely the best-known drug stock on this list is Teva Pharmaceutical Industries (NYSE:TEVA), namely because it's been in the news a lot over the past two years, and not always for the best reasons.

In sum -- take a deep breath, because you're going to need it -- Teva has eliminated its dividend, reduced its outlook multiple times, been sued by 44 states over sales of opioid drugs, contended with generic-drug price weakness, seen its top-selling multiple sclerosis drug face generic competition, and settled a bribery scandal with the Justice Department that led to top executive turnover.

The icing atop all of this is that Teva, the largest generic-drug producer in the world, paid far too much to acquire Actavis Generics from Allergan and wound up saddled with around $35 billion in debt. This left Teva with little financial flexibility to grow its business once generic pricing weakness crept into the picture.

But of the three unimaginably "cheap" drug stocks listed here, Teva is the one with the real prospect of a long-term rebound. Teva CEO Kare Schultz specializes in turnarounds, and he's overseen the reduction of $8 billion in net debt in two years' time. He's also expected to have trimmed $3 billion in annual expenses off Teva's books by the end of this year -- that's about 16% of what it was spending per year before this mess began. When also added to the more than $1 billion Teva saves a year by having eliminated its dividend, the company's cost structure is well under control, and its ability to generate substantial amounts of cash flow isn't in question.

Ultimately, I view Teva as an excellent play for an aging global population. With longevity increasing in most countries, access to medical care improving, and countries like the U.S. fighting back against high-priced brand-name drug, Teva, being the largest generic-drug producer in the world, should see a significant increase in long-term pricing power.

This won't be an overnight turnaround, but Teva's P/E ratio of 3.9 genuinely does look to be a bargain.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.