Investors with an interest in Medical - Drugs stocks have likely encountered both Amneal Pharmaceuticals (AMRX) and Zoetis (ZTS). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Amneal Pharmaceuticals has a Zacks Rank of #2 (Buy), while Zoetis has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that AMRX is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
AMRX currently has a forward P/E ratio of 9.37, while ZTS has a forward P/E of 34.28. We also note that AMRX has a PEG ratio of 0.65. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ZTS currently has a PEG ratio of 2.96.
Another notable valuation metric for AMRX is its P/B ratio of 3.57. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ZTS has a P/B of 24.31.
Based on these metrics and many more, AMRX holds a Value grade of A, while ZTS has a Value grade of D.
AMRX 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 AMRX is likely the superior value option right now.
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AMNEAL PHARMACEUTICALS, INC. (AMRX) : Free Stock Analysis Report
Zoetis Inc. (ZTS) : Free Stock Analysis Report
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