Are Investors Undervaluing Cardinal Health (CAH) Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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.
One company to watch right now is Cardinal Health (CAH). CAH is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 14.39 right now. For comparison, its industry sports an average P/E of 17.78. Over the past 52 weeks, CAH's Forward P/E has been as high as 16.50 and as low as 11.49, with a median of 13.36.
Investors will also notice that CAH has a PEG ratio of 1. 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 industry currently sports an average PEG of 1.66. Over the past 52 weeks, CAH's PEG has been as high as 1.39 and as low as 0.88, with a median of 1.09.
Investors could also keep in mind Patterson Companies (PDCO), an Medical - Dental Supplies stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Shares of Patterson Companies currently holds a Forward P/E ratio of 12.05, and its PEG ratio is 1.31. In comparison, its industry sports average P/E and PEG ratios of 17.78 and 1.66.
Over the past year, PDCO's P/E has been as high as 13.74, as low as 10.85, with a median of 11.80; its PEG ratio has been as high as 1.90, as low as 1.20, with a median of 1.09 during the same time period.
Furthermore, Patterson Companies holds a P/B ratio of 2.69 and its industry's price-to-book ratio is 22.44. PDCO's P/B has been as high as 2.96, as low as 2.25, with a median of 2.59 over the past 12 months.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Cardinal Health and Patterson Companies are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CAH and PDCO feels like a great value stock at the moment.
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Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
Patterson Companies, Inc. (PDCO) : Free Stock Analysis Report
