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Is Cardinal Health (CAH) Stock Undervalued Right Now?

Zacks Equity Research
Illumina (ILMN) closed the most recent trading day at $347.53, moving -1.02% from the previous trading session.

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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is Cardinal Health (CAH). CAH is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 9.41, while its industry has an average P/E of 15.81. CAH's Forward P/E has been as high as 11.92 and as low as 8.36, with a median of 10.16, all within the past year.

CAH is also sporting a PEG ratio of 1.51. 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. CAH's industry has an average PEG of 1.72 right now. Over the last 12 months, CAH's PEG has been as high as 1.85 and as low as 1.05, with a median of 1.56.

We should also highlight that CAH has a P/B ratio of 2.43. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 2.86. CAH's P/B has been as high as 2.92 and as low as 2.04, with a median of 2.58, over the past year.

These are only a few of the key metrics included in Cardinal Health's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, CAH looks like an impressive value stock at the moment.


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