Investors interested in stocks from the Medical - Drugs sector have probably already heard of USANA Health Sciences (USNA) and Zoetis (ZTS). But which of these two stocks presents investors with the better value opportunity right now? 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.
Right now, USANA Health Sciences is sporting 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 USNA has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
USNA currently has a forward P/E ratio of 16.40, while ZTS has a forward P/E of 29.20. We also note that USNA has a PEG ratio of 1.37. 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 2.61.
Another notable valuation metric for USNA is its P/B ratio of 1.75. 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, ZTS has a P/B of 15.19.
These are just a few of the metrics contributing to USNA's Value grade of A and ZTS's Value grade of C.
USNA stands above ZTS thanks to its solid earnings outlook, and based on these valuation figures, we also feel that USNA is the superior value option right now.
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Free: See Our Top Stock and 4 Runners Up >>USANA Health Sciences, Inc. (USNA) : Free Stock Analysis Report
Zoetis Inc. (ZTS) : Free Stock Analysis Report
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