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

Zacks Equity Research
·2 min read

Investors with an interest in Medical - Drugs stocks have likely encountered both Grifols (GRFS) and Zoetis (ZTS). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Grifols and Zoetis are both sporting a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

GRFS currently has a forward P/E ratio of 13.29, while ZTS has a forward P/E of 44.82. We also note that GRFS has a PEG ratio of 1.08. 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 4.41.

Another notable valuation metric for GRFS is its P/B ratio of 1.59. 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 25.83.

Based on these metrics and many more, GRFS holds a Value grade of A, while ZTS has a Value grade of D.

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


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Grifols, S.A. (GRFS) : Free Stock Analysis Report
 
Zoetis Inc. (ZTS) : Free Stock Analysis Report
 
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