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ABC vs. WST: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2 min read

Investors with an interest in Medical - Dental Supplies stocks have likely encountered both AmerisourceBergen (ABC) and West Pharmaceutical Services (WST). 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.

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 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.

Both AmerisourceBergen and West Pharmaceutical Services have a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one piece of the puzzle for value investors.

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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

ABC currently has a forward P/E ratio of 11.40, while WST has a forward P/E of 61.55. We also note that ABC has a PEG ratio of 1.51. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. WST currently has a PEG ratio of 3.01.

Another notable valuation metric for ABC is its P/B ratio of 4.92. 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, WST has a P/B of 12.05.

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

Both ABC and WST 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
 
West Pharmaceutical Services, Inc. (WST) : Free Stock Analysis Report
 
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Zacks Investment Research