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CTLT vs. ZTS: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors looking for stocks in the Medical - Drugs sector might want to consider either Catalent (CTLT) or Zoetis (ZTS). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Catalent has a Zacks Rank of #2 (Buy), while Zoetis has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that CTLT likely has seen a stronger improvement to its earnings outlook than ZTS has recently. However, value investors will care about much more than just this.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

CTLT currently has a forward P/E ratio of 26.93, while ZTS has a forward P/E of 32.56. We also note that CTLT has a PEG ratio of 2.39. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ZTS currently has a PEG ratio of 3.09.

Another notable valuation metric for CTLT is its P/B ratio of 4.80. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, ZTS has a P/B of 23.41.

These are just a few of the metrics contributing to CTLT's Value grade of B and ZTS's Value grade of C.

CTLT has seen stronger estimate revision activity and sports more attractive valuation metrics than ZTS, so it seems like value investors will conclude that CTLT is the superior option right now.


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Catalent, Inc. (CTLT) : Free Stock Analysis Report
 
Zoetis Inc. (ZTS) : Free Stock Analysis Report
 
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