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

Zacks Equity Research

Investors interested in stocks from the Medical - Drugs sector have probably already heard of Catalent (CTLT) and Neurocrine Biosciences (NBIX). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Catalent has a Zacks Rank of #2 (Buy), while Neurocrine Biosciences has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CTLT has an improving earnings outlook. But this is just one piece of the puzzle 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.

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.

CTLT currently has a forward P/E ratio of 22.78, while NBIX has a forward P/E of 642.03. We also note that CTLT has a PEG ratio of 2.11. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. NBIX currently has a PEG ratio of 26.75.

Another notable valuation metric for CTLT is its P/B ratio of 3.90. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, NBIX has a P/B of 15.65.

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

CTLT stands above NBIX thanks to its solid earnings outlook, and based on these valuation figures, we also 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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