Back to top

Image: Bigstock

PAHC or ABT: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors interested in Medical - Products stocks are likely familiar with Phibro Animal Health (PAHC - Free Report) and Abbott (ABT - Free Report) . 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Phibro Animal Health and Abbott are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. 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 just one factor that value investors are interested in.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

PAHC currently has a forward P/E ratio of 14.73, while ABT has a forward P/E of 24.08. We also note that PAHC has a PEG ratio of 1.70. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ABT currently has a PEG ratio of 2.79.

Another notable valuation metric for PAHC is its P/B ratio of 3.33. 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, ABT has a P/B of 4.94.

These metrics, and several others, help PAHC earn a Value grade of A, while ABT has been given a 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.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Abbott Laboratories (ABT) - free report >>

Phibro Animal Health Corporation (PAHC) - free report >>

Published in