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Is AmerisourceBergen (ABC) a Great Value Stock Right Now?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is AmerisourceBergen (ABC). ABC is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 10.91, while its industry has an average P/E of 16.38. Over the past 52 weeks, ABC's Forward P/E has been as high as 14.32 and as low as 10.10, with a median of 12.08.

Investors should also note that ABC holds a PEG ratio of 1.44. 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. ABC's PEG compares to its industry's average PEG of 1.73. Over the past 52 weeks, ABC's PEG has been as high as 1.55 and as low as 1.10, with a median of 1.27.

Finally, we should also recognize that ABC has a P/CF ratio of 10.73. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 15.16. Over the past year, ABC's P/CF has been as high as 15.48 and as low as 6.91, with a median of 10.29.

Value investors will likely look at more than just these metrics, but the above data helps show that AmerisourceBergen is likely undervalued currently. And when considering the strength of its earnings outlook, ABC sticks out at as one of the market's strongest value stocks.


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