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Investors interested in stocks from the Medical - Products sector have probably already heard of Phibro Animal Health (PAHC) and Boston Scientific (BSX). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 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, Phibro Animal Health has a Zacks Rank of #2 (Buy), while Boston Scientific has a Zacks Rank of #3 (Hold). This means that PAHC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
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.
PAHC currently has a forward P/E ratio of 8.64, while BSX has a forward P/E of 33.08. We also note that PAHC has a PEG ratio of 0.33. 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. BSX currently has a PEG ratio of 2.49.
Another notable valuation metric for PAHC is its P/B ratio of 2.76. 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, BSX has a P/B of 6.31.
These metrics, and several others, help PAHC earn a Value grade of A, while BSX has been given a Value grade of D.
PAHC 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 PAHC is likely the superior value option right now.
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Phibro Animal Health Corporation (PAHC) : Free Stock Analysis Report
Boston Scientific Corporation (BSX) : Free Stock Analysis Report