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

Investors interested in Medical - Drugs stocks are likely familiar with Grifols (GRFS) 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.

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 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.

Right now, Grifols is sporting a Zacks Rank of #2 (Buy), while Zoetis has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GRFS has an improving earnings outlook. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

GRFS currently has a forward P/E ratio of 14.93, while ZTS has a forward P/E of 33.66. We also note that GRFS has a PEG ratio of 0.44. 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 2.94.

Another notable valuation metric for GRFS is its P/B ratio of 0.77. 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 16.47.

Based on these metrics and many more, GRFS holds a Value grade of A, while ZTS has a Value grade of D.

GRFS is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that GRFS is likely the superior value option right now.

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Grifols, S.A. (GRFS) : Free Stock Analysis Report

Zoetis Inc. (ZTS) : Free Stock Analysis Report

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Zacks Investment Research