Investors interested in Large Cap Pharmaceuticals stocks are likely familiar with Novartis (NVS) and Novo Nordisk (NVO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Novartis and Novo Nordisk are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that NVS likely has seen a stronger improvement to its earnings outlook than NVO has recently. But this is only part of the picture for value investors.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
NVS currently has a forward P/E ratio of 18.23, while NVO has a forward P/E of 21.33. We also note that NVS has a PEG ratio of 2.19. 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. NVO currently has a PEG ratio of 2.35.
Another notable valuation metric for NVS is its P/B ratio of 4.46. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, NVO has a P/B of 17.71.
These are just a few of the metrics contributing to NVS's Value grade of B and NVO's Value grade of C.
NVS has seen stronger estimate revision activity and sports more attractive valuation metrics than NVO, so it seems like value investors will conclude that NVS is the superior option right now.
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Novartis AG (NVS) : Free Stock Analysis Report
Novo Nordisk A/S (NVO) : Free Stock Analysis Report
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