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Are Investors Undervaluing AmerisourceBergen (ABC) Right Now?

·3 min read

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is AmerisourceBergen (ABC). ABC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 12.36, which compares to its industry's average of 17.55. Over the past 52 weeks, ABC's Forward P/E has been as high as 4,387.73 and as low as 10.53, with a median of 12.43.

Investors will also notice that ABC has a PEG ratio of 1.51. 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. ABC's PEG compares to its industry's average PEG of 1.60. Over the last 12 months, ABC's PEG has been as high as 549.15 and as low as 0.94, with a median of 1.54.

Finally, investors will want to recognize that ABC has a P/CF ratio of 11.33. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 23.41. Over the past 52 weeks, ABC's P/CF has been as high as 14.86 and as low as -7.95, with a median of 12.73.

Investors could also keep in mind McKesson (MCK), an Medical - Dental Supplies stock with a Zacks Rank of # 2 (Buy) and Value grade of A.

Shares of McKesson currently holds a Forward P/E ratio of 14.27, and its PEG ratio is 1.43. In comparison, its industry sports average P/E and PEG ratios of 17.55 and 1.60.

MCK's Forward P/E has been as high as 14.53 and as low as 9.58, with a median of 11.76. During the same time period, its PEG ratio has been as high as 1.67, as low as 0.96, with a median of 1.25.

McKesson also has a P/B ratio of -33.92 compared to its industry's price-to-book ratio of 6.06. Over the past year, its P/B ratio has been as high as -24.38, as low as -717.21, with a median of -52.12.

Value investors will likely look at more than just these metrics, but the above data helps show that AmerisourceBergen and McKesson are likely undervalued currently. And when considering the strength of its earnings outlook, ABC and MCK sticks out as one of the market's strongest value stocks.


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AmerisourceBergen Corporation (ABC) : Free Stock Analysis Report
 
McKesson Corporation (MCK) : Free Stock Analysis Report
 
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