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Should Value Investors Buy AmerisourceBergen (ABC) Stock?

Zacks Equity Research

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.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is AmerisourceBergen (ABC). ABC is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 12.20, while its industry has an average P/E of 17.04. Over the last 12 months, ABC's Forward P/E has been as high as 14.32 and as low as 10.10, with a median of 11.84.

ABC is also sporting a PEG ratio of 1.61. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ABC's industry has an average PEG of 1.77 right now. Over the last 12 months, ABC's PEG has been as high as 1.61 and as low as 1.10, with a median of 1.30.

Finally, we should also recognize that ABC has a P/CF ratio of 12.22. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 16.01. Within the past 12 months, ABC's P/CF has been as high as 12.92 and as low as 6.91, with a median of 10.29.

Value investors will likely look at more than just these metrics, but the above data helps show that AmerisourceBergen is likely undervalued currently. And when considering the strength of its earnings outlook, ABC sticks out at as one of the market's strongest value stocks.


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