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ASRT vs. ZTS: Which Stock Is the Better Value Option?

Zacks Equity Research
·2-min read

Investors interested in stocks from the Medical - Drugs sector have probably already heard of Assertio (ASRT) and Zoetis (ZTS). 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, Assertio is sporting a Zacks Rank of #1 (Strong Buy), while Zoetis has a Zacks Rank of #4 (Sell). This means that ASRT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

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 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.

ASRT currently has a forward P/E ratio of 7.71, while ZTS has a forward P/E of 31.88. We also note that ASRT has a PEG ratio of 0.77. 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. ZTS currently has a PEG ratio of 2.70.

Another notable valuation metric for ASRT is its P/B ratio of 1.26. 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, ZTS has a P/B of 16.32.

These metrics, and several others, help ASRT earn a Value grade of A, while ZTS has been given a Value grade of C.

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


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