Investors interested in Medical - Products stocks are likely familiar with Prestige Consumer Healthcare (PBH) and Abbott (ABT). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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, Prestige Consumer Healthcare has a Zacks Rank of #2 (Buy), while Abbott has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that PBH likely has seen a stronger improvement to its earnings outlook than ABT has recently. However, value investors will care about much more than just this.
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.
PBH currently has a forward P/E ratio of 13.09, while ABT has a forward P/E of 25.03. We also note that PBH has a PEG ratio of 1.87. 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 2.35.
Another notable valuation metric for PBH is its P/B ratio of 1.61. 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, ABT has a P/B of 4.37.
Based on these metrics and many more, PBH holds a Value grade of A, while ABT has a Value grade of C.
PBH 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 PBH is likely the superior value option right now.
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Prestige Consumer Healthcare Inc. (PBH): Free Stock Analysis Report Abbott Laboratories (ABT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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