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CTLT or NBIX: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors interested in Medical - Drugs stocks are likely familiar with Catalent (CTLT) 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.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, both Catalent and Neurocrine Biosciences 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 only part of the picture for value investors.

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 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.

CTLT currently has a forward P/E ratio of 24.16, while NBIX has a forward P/E of 105.73. We also note that CTLT has a PEG ratio of 2.14. 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 4.41.

Another notable valuation metric for CTLT is its P/B ratio of 4.15. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, NBIX has a P/B of 16.44.

These are just a few of the metrics contributing to CTLT's Value grade of B and NBIX's Value grade of D.

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


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Catalent, Inc. (CTLT) : Free Stock Analysis Report
 
Neurocrine Biosciences, Inc. (NBIX) : Free Stock Analysis Report
 
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