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PAHC or RMD: Which Is the Better Value Stock Right Now?

Zacks Equity Research
·2-min read

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 is more attractive to value investors? We'll need to take a closer look to find out.

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 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.

Phibro Animal Health has a Zacks Rank of #2 (Buy), while ResMed has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PAHC is likely seeing its earnings outlook improve to a greater extent. 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.

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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 19.99, while RMD has a forward P/E of 38.49. We also note that PAHC has a PEG ratio of 2. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. RMD currently has a PEG ratio of 2.65.

Another notable valuation metric for PAHC is its P/B ratio of 4.28. 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, RMD has a P/B of 10.36.

These are just a few of the metrics contributing to PAHC's Value grade of B and RMD's Value grade of C.

PAHC sticks out from RMD in both our Zacks Rank and Style Scores models, so value investors will likely feel that PAHC is the better option right now.


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Phibro Animal Health Corporation (PAHC) : Free Stock Analysis Report
 
ResMed Inc. (RMD) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research