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Are Investors Undervaluing AmerisourceBergen (ABC) Right Now?

Zacks Equity Research
In the latest trading session, Target (TGT) closed at $86.80, marking a -0.83% move from the previous day.

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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.

AmerisourceBergen (ABC) is a stock many investors are watching right now. ABC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 11.21, which compares to its industry's average of 15.97. Over the past year, ABC's Forward P/E has been as high as 14.32 and as low as 10.10, with a median of 11.95.

ABC is also sporting a PEG ratio of 1.48. 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. ABC's PEG compares to its industry's average PEG of 1.67. Within the past year, ABC's PEG has been as high as 1.55 and as low as 1.10, with a median of 1.28.

Finally, investors should note that ABC has a P/CF ratio of 11.13. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. ABC's current P/CF looks attractive when compared to its industry's average P/CF of 14.94. Over the past year, ABC's P/CF has been as high as 16.07 and as low as 6.91, with a median of 10.29.

These are just a handful of the figures considered in AmerisourceBergen's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that ABC is an impressive value stock right now.


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