Back to top

Image: Bigstock

PAHC vs. ABT: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors interested in Medical - Products stocks are likely familiar with Phibro Animal Health (PAHC - Free Report) and Abbott (ABT - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Currently, Phibro Animal Health has a Zacks Rank of #2 (Buy), while Abbott has a Zacks Rank of #5 (Strong Sell). This means that PAHC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

PAHC currently has a forward P/E ratio of 20.06, while ABT has a forward P/E of 27.53. We also note that PAHC has a PEG ratio of 1.89. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ABT currently has a PEG ratio of 2.36.

Another notable valuation metric for PAHC is its P/B ratio of 4.83. 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, ABT has a P/B of 6.30.

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

PAHC has seen stronger estimate revision activity and sports more attractive valuation metrics than ABT, so it seems like value investors will conclude that PAHC is the superior option right now.

In-Depth Zacks Research for the Tickers Above

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

Phibro Animal Health Corporation (PAHC) - free report >>

Abbott Laboratories (ABT) - free report >>

Published in