ZBH or ABT: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Medical - Products sector might want to consider either Zimmer Biomet (ZBH) 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, both Zimmer Biomet and Abbott are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
ZBH currently has a forward P/E ratio of 13.95, while ABT has a forward P/E of 21.38. We also note that ZBH has a PEG ratio of 2.06. 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. ABT currently has a PEG ratio of 4.20.
Another notable valuation metric for ZBH is its P/B ratio of 1.77. 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 4.40.
These are just a few of the metrics contributing to ZBH's Value grade of B and ABT's Value grade of C.
Both ZBH and ABT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ZBH is the superior value option right now.
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Zimmer Biomet Holdings, Inc. (ZBH) : Free Stock Analysis Report
Abbott Laboratories (ABT) : Free Stock Analysis Report
