Back to top

Image: Bigstock

GRFS vs. ZTS: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors interested in Medical - Drugs stocks are likely familiar with Grifols (GRFS - Free Report) and Zoetis (ZTS - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Grifols is sporting a Zacks Rank of #2 (Buy), while Zoetis has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GRFS has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

GRFS currently has a forward P/E ratio of 11.61, while ZTS has a forward P/E of 37.07. We also note that GRFS has a PEG ratio of 1.18. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ZTS currently has a PEG ratio of 3.47.

Another notable valuation metric for GRFS is its P/B ratio of 1.45. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, ZTS has a P/B of 20.50.

These metrics, and several others, help GRFS earn a Value grade of A, while ZTS has been given a Value grade of C.

GRFS is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that GRFS is likely the superior value option right now.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Grifols, S.A. (GRFS) - free report >>

Zoetis Inc. (ZTS) - free report >>

Published in