Back to top

Image: Bigstock

AMRX or ZTS: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors with an interest in Medical - Drugs stocks have likely encountered both Amneal Pharmaceuticals (AMRX - Free Report) and Zoetis (ZTS - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Both Amneal Pharmaceuticals and Zoetis have a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is only part of the picture 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.

AMRX currently has a forward P/E ratio of 6.65, while ZTS has a forward P/E of 38.47. We also note that AMRX has a PEG ratio of 0.27. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ZTS currently has a PEG ratio of 3.15.

Another notable valuation metric for AMRX is its P/B ratio of 4.52. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ZTS has a P/B of 21.61.

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

Both AMRX and ZTS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that AMRX is the superior value option right now.


In-Depth Zacks Research for the Tickers Above


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


AMNEAL PHARMACEUTICALS, INC. (AMRX) - free report >>

Zoetis Inc. (ZTS) - free report >>

Published in