Should Value Investors Buy Phibro Animal Health (PAHC) Stock?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is Phibro Animal Health (PAHC). PAHC is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 10.70, which compares to its industry's average of 21.82. Over the past year, PAHC's Forward P/E has been as high as 15.21 and as low as 7.98, with a median of 12.61.

Another notable valuation metric for PAHC is its P/B ratio of 3.65. 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. This company's current P/B looks solid when compared to its industry's average P/B of 5.07. Over the past year, PAHC's P/B has been as high as 4.30 and as low as 2.51, with a median of 3.39.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. PAHC has a P/S ratio of 0.76. This compares to its industry's average P/S of 1.33.

Finally, we should also recognize that PAHC has a P/CF ratio of 15.17. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. PAHC's current P/CF looks attractive when compared to its industry's average P/CF of 33.60. Over the past year, PAHC's P/CF has been as high as 22.96 and as low as 11.27, with a median of 16.12.

These are just a handful of the figures considered in Phibro Animal Health's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that PAHC is an impressive value stock right now.

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This article originally published on Zacks Investment Research (zacks.com).

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