Yahoo Finance UTHR or ZTS: Which Is the Better Value Stock Right Now?
Investors with an interest in Medical - Drugs stocks have likely encountered both United Therapeutics (UTHR) and Zoetis (ZTS). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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.
United Therapeutics has a Zacks Rank of #1 (Strong Buy), while Zoetis has a Zacks Rank of #4 (Sell) right now. This means that UTHR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.
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.
UTHR currently has a forward P/E ratio of 12.81, while ZTS has a forward P/E of 31.68. We also note that UTHR has a PEG ratio of 1.06. 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 2.83.
Another notable valuation metric for UTHR is its P/B ratio of 2.56. 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 16.48.
These are just a few of the metrics contributing to UTHR's Value grade of B and ZTS's Value grade of D.
UTHR sticks out from ZTS in both our Zacks Rank and Style Scores models, so value investors will likely feel that UTHR is the better option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
United Therapeutics Corporation (UTHR) : Free Stock Analysis Report
Zoetis Inc. (ZTS) : Free Stock Analysis Report
