PAHC vs. RMD: Which Stock Should Value Investors Buy Now?
Investors looking for stocks in the Medical - Products sector might want to consider either Phibro Animal Health (PAHC) or ResMed (RMD). But which of these two stocks presents investors with the better value opportunity right now? 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, Phibro Animal Health has a Zacks Rank of #2 (Buy), while ResMed 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 PAHC has an improving earnings outlook. However, value investors will care about much more than just this.
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.
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.
PAHC currently has a forward P/E ratio of 15.65, while RMD has a forward P/E of 39.03. We also note that PAHC has a PEG ratio of 1.57. 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. RMD currently has a PEG ratio of 2.82.
Another notable valuation metric for PAHC is its P/B ratio of 3.86. 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, RMD has a P/B of 10.71.
These are just a few of the metrics contributing to PAHC's Value grade of B and RMD's Value grade of D.
PAHC stands above RMD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PAHC is the superior value option right now.
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Phibro Animal Health Corporation (PAHC): Free Stock Analysis Report
ResMed Inc. (RMD): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.