PBH vs. NEOG: Which Stock Is the Better Value Option?
Investors interested in Medical - Products stocks are likely familiar with Prestige Consumer Healthcare (PBH) and Neogen (NEOG). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both Prestige Consumer Healthcare and Neogen have a Zacks Rank of #2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture for value investors.
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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
PBH currently has a forward P/E ratio of 10.26, while NEOG has a forward P/E of 41.51. We also note that PBH has a PEG ratio of 1.47. 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. NEOG currently has a PEG ratio of 4.15.
Another notable valuation metric for PBH is its P/B ratio of 1.16. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, NEOG has a P/B of 1.32.
Based on these metrics and many more, PBH holds a Value grade of A, while NEOG has a Value grade of D.
Both PBH and NEOG are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PBH is the superior value option right now.
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Neogen Corporation (NEOG) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
