PAHC vs. HAE: Which Stock Is the Better Value Option?

Investors with an interest in Medical - Products stocks have likely encountered both Phibro Animal Health (PAHC) and Haemonetics (HAE). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Phibro Animal Health is sporting a Zacks Rank of #1 (Strong Buy), while Haemonetics has a Zacks Rank of #3 (Hold). This means that PAHC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.

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.

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.

PAHC currently has a forward P/E ratio of 10.65, while HAE has a forward P/E of 19.80. We also note that PAHC has a PEG ratio of 1.08. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. HAE currently has a PEG ratio of 2.10.

Another notable valuation metric for PAHC is its P/B ratio of 3.92. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, HAE has a P/B of 5.68.

Based on these metrics and many more, PAHC holds a Value grade of B, while HAE has a Value grade of C.

PAHC has seen stronger estimate revision activity and sports more attractive valuation metrics than HAE, so it seems like value investors will conclude that PAHC is the superior option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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