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ASRT vs. ZTS: Which Stock Should Value Investors Buy Now?

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

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Assertio has a Zacks Rank of #2 (Buy), while Zoetis has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ASRT has an improving earnings outlook. However, value investors will care about much more than just this.

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.

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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.

ASRT currently has a forward P/E ratio of 8.64, while ZTS has a forward P/E of 32.18. We also note that ASRT has a PEG ratio of 0.86. 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 2.73.

Another notable valuation metric for ASRT is its P/B ratio of 1.21. 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 16.47.

These are just a few of the metrics contributing to ASRT's Value grade of A and ZTS's 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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Assertio Holdings, Inc. (ASRT) : Free Stock Analysis Report
 
Zoetis Inc. (ZTS) : Free Stock Analysis Report
 
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Zacks Investment Research