Investors interested in stocks from the Medical - Drugs sector have probably already heard of Pacira (PCRX) and Catalent (CTLT). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Pacira and Catalent are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that PCRX likely has seen a stronger improvement to its earnings outlook than CTLT has recently. However, value investors will care about much more than just this.
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.
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.
PCRX currently has a forward P/E ratio of 21.91, while CTLT has a forward P/E of 37.60. We also note that PCRX has a PEG ratio of 0.66. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CTLT currently has a PEG ratio of 3.14.
Another notable valuation metric for PCRX is its P/B ratio of 4.93. 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, CTLT has a P/B of 5.88.
These metrics, and several others, help PCRX earn a Value grade of B, while CTLT has been given a Value grade of C.
PCRX stands above CTLT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PCRX is the superior value option right now.
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Pacira BioSciences, Inc. (PCRX) : Free Stock Analysis Report
Catalent, Inc. (CTLT) : Free Stock Analysis Report
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