Investors interested in stocks from the Medical - Products sector have probably already heard of Phibro Animal Health (PAHC) and Boston Scientific (BSX). But which of these two companies is the best option for those looking for undervalued stocks? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Phibro Animal Health is sporting a Zacks Rank of #1 (Strong Buy), while Boston Scientific has a Zacks Rank of #2 (Buy). 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 also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
PAHC currently has a forward P/E ratio of 14.68, while BSX has a forward P/E of 32.69. We also note that PAHC has a PEG ratio of 1.15. 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. BSX currently has a PEG ratio of 2.34.
Another notable valuation metric for PAHC is its P/B ratio of 5.27. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, BSX has a P/B of 6.36.
These are just a few of the metrics contributing to PAHC's Value grade of B and BSX's Value grade of C.
PAHC 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 PAHC is likely the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Phibro Animal Health Corporation (PAHC): Free Stock Analysis Report Boston Scientific Corporation (BSX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
