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Is Cardinal Health (CAH) Stock Undervalued Right Now?

Zacks Equity Research
Provident Financial (PFS) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

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, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 company to watch right now is Cardinal Health (CAH). CAH is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 10.61, which compares to its industry's average of 15.76. Over the last 12 months, CAH's Forward P/E has been as high as 12.35 and as low as 8.36, with a median of 10.24.

Investors should also note that CAH holds a PEG ratio of 1.71. 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 PEG compares to its industry's average PEG of 1.75. Within the past year, CAH's PEG has been as high as 1.85 and as low as 1.05, with a median of 1.54.

We should also highlight that CAH has a P/B ratio of 2.74. The P/B ratio is used to compare a stock's market value with 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 2.84. Over the past year, CAH's P/B has been as high as 2.99 and as low as 2.04, with a median of 2.60.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Cardinal Health is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CAH feels like a great value stock at the moment.


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