BMY vs. NVO: Which Stock Is the Better Value Option?
Investors with an interest in Large Cap Pharmaceuticals stocks have likely encountered both Bristol-Myers Squibb (BMY) and Novo Nordisk (NVO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Bristol-Myers Squibb and Novo Nordisk are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that BMY likely has seen a stronger improvement to its earnings outlook than NVO has recently. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
BMY currently has a forward P/E ratio of 16.52, while NVO has a forward P/E of 19.74. We also note that BMY has a PEG ratio of 1.51. 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. NVO currently has a PEG ratio of 2.61.
Another notable valuation metric for BMY is its P/B ratio of 7.82. 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, NVO has a P/B of 16.61.
These metrics, and several others, help BMY earn a Value grade of B, while NVO has been given a Value grade of C.
BMY 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 BMY is likely the superior value option right now.
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Bristol-Myers Squibb Company (BMY) : Free Stock Analysis Report
Novo Nordisk A/S (NVO) : Free Stock Analysis Report
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