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

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Investors interested in Medical - Drugs stocks are likely familiar with USANA Health Sciences (USNA - Free Report) and Zoetis (ZTS - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.

USANA Health Sciences and Zoetis are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that USNA is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

USNA currently has a forward P/E ratio of 18.02, while ZTS has a forward P/E of 34.60. We also note that USNA has a PEG ratio of 1.50. 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 3.02.

Another notable valuation metric for USNA is its P/B ratio of 2.38. 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 18.77.

Based on these metrics and many more, USNA holds a Value grade of A, while ZTS has a Value grade of C.

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


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