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Is AmerisourceBergen (ABC) Stock Undervalued Right Now?

Zacks Equity Research

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is AmerisourceBergen (ABC). ABC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 12.27 right now. For comparison, its industry sports an average P/E of 15.77. Over the last 12 months, ABC's Forward P/E has been as high as 14.32 and as low as 10.10, with a median of 11.84.

ABC is also sporting a PEG ratio of 1.55. 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. ABC's industry has an average PEG of 1.61 right now. Within the past year, ABC's PEG has been as high as 1.66 and as low as 1.10, with a median of 1.32.

Finally, we should also recognize that ABC has a P/CF ratio of 12.50. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 14.90. Over the past year, ABC's P/CF has been as high as 12.68 and as low as 6.91, with a median of 10.29.

These are just a handful of the figures considered in AmerisourceBergen's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that ABC is an impressive value stock right now.


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