Which stock offers the better value option?

Investors interested in stocks in the medical and pharmaceutical sector have probably come across both Assertio (ASRT) and Zoetis (ZTS). But which of these two companies is the best option for those looking for undervalued stocks? Let’s take a closer look.

There are many strategies for discovering value stocks, but we have found that combining a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank places an emphasis on earnings estimates and estimate revisions, while our Style Scores aim to identify stocks with specific traits.

Assertio currently has a Zacks Rank of #2 (Buy), while Zoetis currently has a Zacks Rank of #3 (Hold). This means ASRT’s earnings estimate revisions have been more impressive, so investors should feel comfortable with the improved analyst forecast. But that’s only one piece of the puzzle for value investors.

Value investors are also interested in a number of proven valuation metrics that show when a company is undervalued at its current share price.

The Value category of the Style Scores system identifies undervalued companies using a number of key metrics, including the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other fundamentals that help us determine a company’s fair value.

ASRT currently has a forward P/E ratio of 7.29, while ZTS has a forward P/E ratio of 29.86. We also note that ASRT has a PEG ratio of 0.73. This figure is similar to the commonly used P/E ratio, with the PEG ratio also taking into account a company’s expected earnings growth rate. ZTS currently has a PEG ratio of 2.76.

Another important valuation metric for ASRT is its P/B ratio of 1.46. The P/B ratio is used to compare the market value of a stock to its book value, which is defined as total assets minus total liabilities. For comparison, ZTS has a P/B ratio of 14.57.

These are just some of the metrics that contribute to the A score for ASRT and the C score for ZTS.

ASRT stands out from ZTS in both our Zacks Rank and Style Scores models, so value investors likely consider ASRT to be the better option right now.

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Assertio Holdings, Inc. (ASRT): Free Stock Analysis Report

Zoetis Inc. (ZTS): Free Stock Analysis Report

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