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PRGO vs. PAHC: Which Stock Should Value Investors Buy Now?

Zacks Equity Research

Investors interested in stocks from the Medical - Products sector have probably already heard of Perrigo (PRGO) and Phibro Animal Health (PAHC). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Perrigo is sporting a Zacks Rank of #2 (Buy), while Phibro Animal Health has a Zacks Rank of #3 (Hold). This means that PRGO's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

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.

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Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

PRGO currently has a forward P/E ratio of 13.79, while PAHC has a forward P/E of 23.24. We also note that PRGO has a PEG ratio of 5.52. 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. PAHC currently has a PEG ratio of 7.22.

Another notable valuation metric for PRGO is its P/B ratio of 1.39. 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, PAHC has a P/B of 5.05.

These are just a few of the metrics contributing to PRGO's Value grade of B and PAHC's Value grade of C.

PRGO stands above PAHC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PRGO is the superior value option right now.


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Perrigo Company plc (PRGO) : Free Stock Analysis Report
 
Phibro Animal Health Corporation (PAHC) : Free Stock Analysis Report
 
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Zacks Investment Research