Are Investors Undervaluing Phibro Animal Health (PAHC) Right Now?

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.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is Phibro Animal Health (PAHC). PAHC is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 15.37 right now. For comparison, its industry sports an average P/E of 17.03. Over the past 52 weeks, PAHC's Forward P/E has been as high as 16.56 and as low as 7.98, with a median of 12.28.

PAHC is also sporting a PEG ratio of 1.20. 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. PAHC's industry currently sports an average PEG of 1.98. PAHC's PEG has been as high as 1.74 and as low as 0.30, with a median of 0.50, all within the past year.

Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. PAHC has a P/S ratio of 0.96. This compares to its industry's average P/S of 1.62.

Value investors will likely look at more than just these metrics, but the above data helps show that Phibro Animal Health is likely undervalued currently. And when considering the strength of its earnings outlook, PAHC sticks out as one of the market's strongest value stocks.

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

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