Investors with an interest in Medical - Drugs stocks have likely encountered both USANA Health Sciences (USNA) and Zoetis (ZTS). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.
Right now, USANA Health Sciences is sporting a Zacks Rank of #2 (Buy), while Zoetis has a Zacks Rank of #3 (Hold). 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. But this is just one piece of the puzzle for value investors.
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.
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.
USNA currently has a forward P/E ratio of 13.52, while ZTS has a forward P/E of 24.50. We also note that USNA has a PEG ratio of 1.13. 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 2.54.
Another notable valuation metric for USNA is its P/B ratio of 1.24. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ZTS has a P/B of 14.71.
These metrics, and several others, help USNA earn a Value grade of A, while ZTS has been given a Value grade of C.
USNA stands above ZTS thanks to its solid earnings outlook, and based on these valuation figures, we also feel that USNA is the superior value option right now.
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USANA Health Sciences, Inc. (USNA): Free Stock Analysis Report Zoetis Inc. (ZTS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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