Investors interested in Medical - Dental Supplies stocks are likely familiar with AmerisourceBergen (ABC) and West Pharmaceutical Services (WST). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, AmerisourceBergen is sporting a Zacks Rank of #2 (Buy), while West Pharmaceutical Services has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ABC likely has seen a stronger improvement to its earnings outlook than WST has recently. But this is just one factor that value investors are interested in.
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.
ABC currently has a forward P/E ratio of 11.56, while WST has a forward P/E of 41.99. We also note that ABC has a PEG ratio of 1.53. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. WST currently has a PEG ratio of 3.67.
Another notable valuation metric for ABC is its P/B ratio of 5.47. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, WST has a P/B of 6.39.
These metrics, and several others, help ABC earn a Value grade of A, while WST has been given a Value grade of D.
ABC has seen stronger estimate revision activity and sports more attractive valuation metrics than WST, so it seems like value investors will conclude that ABC is the superior option right now.
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AmerisourceBergen Corporation (ABC) : Free Stock Analysis Report
West Pharmaceutical Services, Inc. (WST) : Free Stock Analysis Report
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