Investors interested in stocks from the Medical - Drugs sector have probably already heard of Catalent (CTLT) and Orion OYJ Unsponsored ADR (ORINY). But which of these two stocks presents investors with the better value opportunity right now? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Catalent has a Zacks Rank of #2 (Buy), while Orion OYJ Unsponsored ADR has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CTLT likely has seen a stronger improvement to its earnings outlook than ORINY has recently. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
CTLT currently has a forward P/E ratio of 21.90, while ORINY has a forward P/E of 23.63. We also note that CTLT has a PEG ratio of 2.03. 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. ORINY currently has a PEG ratio of 15.75.
Another notable valuation metric for CTLT is its P/B ratio of 3.75. 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, ORINY has a P/B of 6.37.
These metrics, and several others, help CTLT earn a Value grade of B, while ORINY has been given a Value grade of C.
CTLT has seen stronger estimate revision activity and sports more attractive valuation metrics than ORINY, so it seems like value investors will conclude that CTLT is the superior option right now.
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Catalent, Inc. (CTLT) : Free Stock Analysis Report
Orion OYJ Unsponsored ADR (ORINY) : Free Stock Analysis Report
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