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ABC vs. ALGN: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors looking for stocks in the Medical - Dental Supplies sector might want to consider either AmerisourceBergen (ABC) or Align Technology (ALGN). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, both AmerisourceBergen and Align Technology are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.

ABC currently has a forward P/E ratio of 12.38, while ALGN has a forward P/E of 56.22. We also note that ABC has a PEG ratio of 1.64. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ALGN currently has a PEG ratio of 2.40.

Another notable valuation metric for ABC is its P/B ratio of 5.86. 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, ALGN has a P/B of 19.68.

These are just a few of the metrics contributing to ABC's Value grade of A and ALGN's Value grade of D.

Both ABC and ALGN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ABC is the superior value option right now.


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AmerisourceBergen Corporation (ABC) : Free Stock Analysis Report
 
Align Technology, Inc. (ALGN) : Free Stock Analysis Report
 
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