Should Value Investors Buy AmerisourceBergen (ABC) Stock?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
AmerisourceBergen (ABC) is a stock many investors are watching right now. ABC is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 10.17, which compares to its industry's average of 19. Over the past year, ABC's Forward P/E has been as high as 12.62 and as low as 10.10, with a median of 11.32.
Investors should also note that ABC holds a PEG ratio of 1.37. 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 1.97 right now. ABC's PEG has been as high as 1.66 and as low as 1.26, with a median of 1.46, all within the past year.
Finally, investors will want to recognize that ABC has a P/CF ratio of 14.92. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 37.65. Over the past year, ABC's P/CF has been as high as 17.96 and as low as 9.18, with a median of 12.34.
These are only a few of the key metrics included in AmerisourceBergen's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, ABC looks like an impressive value stock at the moment.
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