PETQ or ABT: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Medical - Products sector might want to consider either PetIQ (PETQ) or Abbott (ABT). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, PetIQ has a Zacks Rank of #2 (Buy), while Abbott has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PETQ is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
PETQ currently has a forward P/E ratio of 16.81, while ABT has a forward P/E of 24.43. We also note that PETQ has a PEG ratio of 2.10. 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. ABT currently has a PEG ratio of 2.71.
Another notable valuation metric for PETQ is its P/B ratio of 2.37. 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, ABT has a P/B of 5.
These metrics, and several others, help PETQ earn a Value grade of A, while ABT has been given a Value grade of C.
PETQ 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 PETQ is likely the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
PetIQ, Inc. (PETQ) : Free Stock Analysis Report
Abbott Laboratories (ABT) : Free Stock Analysis Report
