PBH or NEOG: Which Is the Better Value Stock Right Now?

Investors with an interest in Medical - Products stocks have likely encountered both Prestige Consumer Healthcare (PBH) and Neogen (NEOG). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.

Both Prestige Consumer Healthcare and Neogen have a Zacks Rank of #2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture for value investors.

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.

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.

PBH currently has a forward P/E ratio of 10.30, while NEOG has a forward P/E of 38.41. We also note that PBH has a PEG ratio of 1.47. 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. NEOG currently has a PEG ratio of 3.84.

Another notable valuation metric for PBH is its P/B ratio of 1.16. 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, NEOG has a P/B of 1.23.

These metrics, and several others, help PBH earn a Value grade of A, while NEOG has been given a Value grade of D.

Both PBH and NEOG are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PBH is the superior value option right now.

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

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