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HKMPF or ZTS: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors interested in Medical - Drugs stocks are likely familiar with Hikma Pharmaceuticals Plc (HKMPF) and Zoetis (ZTS). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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.

Hikma Pharmaceuticals Plc and Zoetis are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. This means that HKMPF's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.

HKMPF currently has a forward P/E ratio of 16, while ZTS has a forward P/E of 35.16. We also note that HKMPF has a PEG ratio of 1.72. 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. ZTS currently has a PEG ratio of 3.17.

Another notable valuation metric for HKMPF is its P/B ratio of 3.41. 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 24.76.

Based on these metrics and many more, HKMPF holds a Value grade of B, while ZTS has a Value grade of C.

HKMPF is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that HKMPF is likely the superior value option right now.


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