Phibro Animal Health (PAHC) Is A Blue Chip Value Stock: Should You Buy?

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What are Zacks style scores?

Zacks Style Scores are a unique set of guidelines that rate stocks based on three popular investment types and were developed as complementary indicators for the Zacks Ranking. This combination helps investors choose the stocks most likely to beat the market over the next 30 days.

Each stock is assigned a rating of A, B, C, D or F based on its value, growth and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, etc. This means that the higher the score, the more likely the stock is to outperform.

Style Scores are divided into four categories:

Value rating

Value investors love finding good stocks at good prices, especially before the broader market realizes a stock’s true value. Using ratios such as P/E, PEG, Price/Sales, Price/Cash Flow and many other multiples, the Value Style Score identifies the most attractive and discounted stocks.

Growth score

While good value is important, growth-oriented investors focus more on a company’s financial strength and health, as well as its future prospects. The Growth Style Score considers forecasted and historical earnings, sales and cash flow to uncover stocks that will experience sustainable long-term growth.

Momentum Score

Momentum traders and investors live by the saying “the trend is your friend”. This style of investing involves taking advantage of rising or falling trends in a stock’s price or earnings prospects. Using factors such as the week-to-week price change and the monthly percentage change in earnings estimates, the Momentum Style Score can indicate favorable times to create a position in high-momentum stocks.

VGM score

What if you like to use all three types of investments? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive metrics to use with the Zacks Ranking. It rates each stock based on their combined weighted styles, helping to target companies with the most attractive value, the best growth forecasts and the most promising momentum.

How Style Scores Work with Zacks Ranking

The Zacks Ranking is a proprietary stock rating model that harnesses the power of earnings estimate revisions or changes to a company’s earnings forecast to help investors build a successful portfolio.

It’s been a big hit, with #1 stocks (Strong Buy) producing the highest average annual return of +25.41% since 1988. That’s more than double the S&P 500. But due to the large number of stocks that we assess, there are over 200 companies with a strong Buy Rank, plus another 600 with a #2 (Buy) Rank, on any given day.

With over 800 top-rated stocks to choose from, it can certainly feel overwhelming deciding which ones are right for you and your investment journey.

This is where Style Scores come in.

To have the best chance of big returns, you’ll always want to consider stocks with a Zacks #1 or #2 ranking that also have A or B style scores, which will give you the greatest likelihood of success. If you are considering stocks with a #3 (Hold) rank, it is important that they also have scores of A or B to ensure the most upside potential.

As mentioned above, the scores are designed to work with the Zacks ranking, so any changes in a company’s earnings outlook should be a deciding factor when deciding which stocks to buy.

For example, a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one that displays scores of A and B, still has a downside earnings forecast, and a much greater probability than the its share price falls. as well as.

So the more stocks you have with a rank of #1 or #2 and scores of A or B, the better.

Stock to watch: Phibro Animal Health (PAHC)

Based in New Jersey, Phibro Animal Health Corporation is a leading diversified global animal health and mineral nutrition company. The company offers a wide range of products for food animals, including poultry, swine, beef and dairy cattle and aquaculture. In addition to animal health and mineral nutrition products, Phibro manufactures and markets specific ingredients for the personal care, automotive, industrial chemical and chemical catalyst industries. Currently, Phibro sells over 1,200 products in over 65 countries.

PAHC is #2 (buy) on the Zacks rank, with a VGM score of A.

It also boasts a value style score of A thanks to attractive valuation metrics like a forward P/E ratio of 15.14; value investors should take this into account.

Two analysts revised their earnings estimate higher in the past 60 days for fiscal 2022, while Zacks’ consensus estimate rose $0.10 to $1.38 per share. PAHC also shows an average earnings surprise of 1.1%.

With a strong Zacks ranking and top value and VGM style scores, PAHC should be on the shortlist for investors.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Boyd S. Abbott