Investors interested in stocks from the Medical - Products sector have probably already heard of Prestige Consumer Healthcare (PBH) and Abbott (ABT). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.

Prestige Consumer Healthcare and Abbott are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PBH has an improving earnings outlook. However, value investors will care about much more than just this.

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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

PBH currently has a forward P/E ratio of 16.94, while ABT has a forward P/E of 24.99. We also note that PBH has a PEG ratio of 2.42. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ABT currently has a PEG ratio of 2.43.

Another notable valuation metric for PBH is its P/B ratio of 2.22. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ABT has a P/B of 4.67.

These are just a few of the metrics contributing to PBH's Value grade of B and ABT's Value grade of C.

PBH is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that PBH is likely the superior value option right now.

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Prestige Consumer Healthcare Inc. (PBH) : Free Stock Analysis Report

Abbott Laboratories (ABT) : Free Stock Analysis Report

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

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