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AHCO vs. ABT: Which Stock Is the Better Value Option?
Investors interested in Medical - Products stocks are likely familiar with AdaptHealth Corp. (AHCO - Free Report) and Abbott (ABT - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.
Currently, AdaptHealth Corp. has a Zacks Rank of #2 (Buy), while Abbott has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that AHCO is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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.
AHCO currently has a forward P/E ratio of 10.25, while ABT has a forward P/E of 26.82. We also note that AHCO has a PEG ratio of 1.12. 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 2.57.
Another notable valuation metric for AHCO is its P/B ratio of 0.97. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ABT has a P/B of 5.
Based on these metrics and many more, AHCO holds a Value grade of A, while ABT has a Value grade of C.
AHCO sticks out from ABT in both our Zacks Rank and Style Scores models, so value investors will likely feel that AHCO is the better option right now.