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BMY vs. LLY: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
Crown (CCK) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Investors interested in Large Cap Pharmaceuticals stocks are likely familiar with Bristol-Myers Squibb (BMY) and Eli Lilly (LLY). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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.

Right now, both Bristol-Myers Squibb and Eli Lilly are sporting a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

BMY currently has a forward P/E ratio of 15.37, while LLY has a forward P/E of 20.71. We also note that BMY has a PEG ratio of 1.50. 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. LLY currently has a PEG ratio of 1.84.

Another notable valuation metric for BMY is its P/B ratio of 7.37. 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, LLY has a P/B of 10.47.

Based on these metrics and many more, BMY holds a Value grade of B, while LLY has a Value grade of C.

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


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Bristol-Myers Squibb Company (BMY) : Free Stock Analysis Report
 
Eli Lilly and Company (LLY) : Free Stock Analysis Report
 
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