Investors interested in stocks from the Medical - Generic Drugs sector have probably already heard of Mallinckrodt (MNK) and Amphastar Pharmaceuticals (AMPH). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Mallinckrodt has a Zacks Rank of #1 (Strong Buy), while Amphastar Pharmaceuticals 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 MNK has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
MNK currently has a forward P/E ratio of 2.87, while AMPH has a forward P/E of 59.86. We also note that MNK has a PEG ratio of 0.24. 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. AMPH currently has a PEG ratio of 2.39.
Another notable valuation metric for MNK is its P/B ratio of 0.68. 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, AMPH has a P/B of 2.65.
Based on these metrics and many more, MNK holds a Value grade of A, while AMPH has a Value grade of D.
MNK sticks out from AMPH in both our Zacks Rank and Style Scores models, so value investors will likely feel that MNK is the better option right now.
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Mallinckrodt public limited company (MNK) : Free Stock Analysis Report
Amphastar Pharmaceuticals, Inc. (AMPH) : Free Stock Analysis Report
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