PAHC vs. HAE: Which Stock Should Value Investors Buy Now?

Investors interested in stocks from the Medical - Products sector have probably already heard of 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.

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 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, Phibro Animal Health is sporting a Zacks Rank of #2 (Buy), while Haemonetics 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 PAHC has an improving earnings outlook. But this is only part of the picture for value investors.

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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

PAHC currently has a forward P/E ratio of 10.06, while HAE has a forward P/E of 20.36. We also note that PAHC has a PEG ratio of 1.02. 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. HAE currently has a PEG ratio of 2.15.

Another notable valuation metric for PAHC is its P/B ratio of 3.62. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, HAE has a P/B of 5.84.

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

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

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

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