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AMRX vs. NBIX: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors interested in stocks from the Medical - Drugs sector have probably already heard of Amneal Pharmaceuticals (AMRX) and Neurocrine Biosciences (NBIX). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Amneal Pharmaceuticals and Neurocrine Biosciences are both sporting 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 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.

AMRX currently has a forward P/E ratio of 9.40, while NBIX has a forward P/E of 31.88. We also note that AMRX has a PEG ratio of 0.65. 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. NBIX currently has a PEG ratio of 1.33.

Another notable valuation metric for AMRX is its P/B ratio of 3.54. 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, NBIX has a P/B of 18.24.

These are just a few of the metrics contributing to AMRX's Value grade of A and NBIX's Value grade of C.

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


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AMNEAL PHARMACEUTICALS, INC. (AMRX) : Free Stock Analysis Report
 
Neurocrine Biosciences, Inc. (NBIX) : Free Stock Analysis Report
 
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