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.
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 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, Phibro Animal Health is sporting a Zacks Rank of #1 (Strong Buy), while Boston Scientific has a Zacks Rank of #2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PAHC has 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.
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 16.72, while BSX has a forward P/E of 33.37. We also note that PAHC has a PEG ratio of 1.31. 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 2.04.
Another notable valuation metric for PAHC is its P/B ratio of 6.01. 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, BSX has a P/B of 6.61.
These metrics, and several others, help PAHC earn a Value grade of B, while BSX has been given a Value grade of C.
PAHC stands above BSX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PAHC is the superior value option right now.
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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).
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