Investors interested in stocks from the Medical - Drugs sector have probably already heard of Jazz Pharmaceuticals (JAZZ) and Zoetis (ZTS). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Both Jazz Pharmaceuticals and Zoetis have a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture 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 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.
JAZZ currently has a forward P/E ratio of 8.41, while ZTS has a forward P/E of 32.82. We also note that JAZZ has a PEG ratio of 0.93. 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. ZTS currently has a PEG ratio of 2.91.
Another notable valuation metric for JAZZ is its P/B ratio of 2.41. 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, ZTS has a P/B of 23.40.
These are just a few of the metrics contributing to JAZZ's Value grade of A and ZTS's Value grade of C.
Both JAZZ and ZTS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that JAZZ is the superior value option right now.
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Jazz Pharmaceuticals PLC (JAZZ) : Free Stock Analysis Report
Zoetis Inc. (ZTS) : Free Stock Analysis Report
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