Are Investors Undervaluing Cardinal Health (CAH) Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Cardinal Health (CAH) is a stock many investors are watching right now. CAH is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 12.53, while its industry has an average P/E of 17.87. CAH's Forward P/E has been as high as 14.81 and as low as 9.25, with a median of 12.48, all within the past year.
We also note that CAH holds a PEG ratio of 1.08. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CAH's PEG compares to its industry's average PEG of 1.52. Over the last 12 months, CAH's PEG has been as high as 8.89 and as low as 1.08, with a median of 1.50.
If you're looking for another solid Medical - Dental Supplies value stock, take a look at McKesson (MCK). MCK is a # 2 (Buy) stock with a Value score of A.
McKesson is trading at a forward earnings multiple of 13.21 at the moment, with a PEG ratio of 1.28. This compares to its industry's average P/E of 17.87 and average PEG ratio of 1.52.
Over the past year, MCK's P/E has been as high as 15.66, as low as 11.92, with a median of 14.02; its PEG ratio has been as high as 1.56, as low as 1.01, with a median of 1.50 during the same time period.
McKesson also has a P/B ratio of -22.77 compared to its industry's price-to-book ratio of 5.01. Over the past year, its P/B ratio has been as high as -22.77, as low as -59.10, with a median of -33.16.
Value investors will likely look at more than just these metrics, but the above data helps show that Cardinal Health and McKesson are likely undervalued currently. And when considering the strength of its earnings outlook, CAH and MCK sticks out as one of the market's strongest value stocks.
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Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
McKesson Corporation (MCK) : Free Stock Analysis Report
