Investors looking for stocks in the Medical - Products sector might want to consider either Abbott (ABT) or PetIQ (PETQ). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Abbott has a Zacks Rank of #2 (Buy), while PetIQ has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that ABT likely has seen a stronger improvement to its earnings outlook than PETQ has recently. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
ABT currently has a forward P/E ratio of 23.46, while PETQ has a forward P/E of 51.78. We also note that ABT has a PEG ratio of 1.89. 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. PETQ currently has a PEG ratio of 2.07.
Another notable valuation metric for ABT is its P/B ratio of 3.86. 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, PETQ has a P/B of 5.17.
Based on these metrics and many more, ABT holds a Value grade of B, while PETQ has a Value grade of C.
ABT 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 ABT is likely the superior value option right now.
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Abbott Laboratories (ABT) : Free Stock Analysis Report
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