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GRFS vs. ZTS: Which Stock Should Value Investors Buy Now?

Zacks Equity Research

Investors interested in Medical - Drugs stocks are likely familiar with Grifols (GRFS) and Zoetis (ZTS). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Currently, Grifols has a Zacks Rank of #2 (Buy), while Zoetis has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GRFS has an improving earnings outlook. However, value investors will care about much more than just this.

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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

GRFS currently has a forward P/E ratio of 14.46, while ZTS has a forward P/E of 33.54. We also note that GRFS has a PEG ratio of 1.04. 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. ZTS currently has a PEG ratio of 3.05.

Another notable valuation metric for GRFS is its P/B ratio of 1.83. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ZTS has a P/B of 22.38.

These are just a few of the metrics contributing to GRFS's Value grade of A and ZTS's Value grade of D.

GRFS sticks out from ZTS in both our Zacks Rank and Style Scores models, so value investors will likely feel that GRFS is the better option right now.


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Grifols, S.A. (GRFS) : Free Stock Analysis Report
 
Zoetis Inc. (ZTS) : Free Stock Analysis Report
 
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