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AMRX vs. ZTS: Which Stock Should Value Investors Buy Now?

·2 min read

Investors looking for stocks in the Medical - Drugs sector might want to consider either Amneal Pharmaceuticals (AMRX) or Zoetis (ZTS). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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 Amneal Pharmaceuticals and Zoetis are sporting a Zacks Rank of # 2 (Buy). 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 only part of the picture 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.

AMRX currently has a forward P/E ratio of 6.29, while ZTS has a forward P/E of 43.25. We also note that AMRX has a PEG ratio of 0.25. 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. ZTS currently has a PEG ratio of 3.36.

Another notable valuation metric for AMRX is its P/B ratio of 4.22. 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, ZTS has a P/B of 22.52.

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

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


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AMNEAL PHARMACEUTICALS, INC. (AMRX) : Free Stock Analysis Report
 
Zoetis Inc. (ZTS) : Free Stock Analysis Report
 
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