Investors interested in Large Cap Pharmaceuticals stocks are likely familiar with Sanofi (SNY) and Pfizer (PFE). 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 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.
Sanofi and Pfizer are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. This means that SNY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
SNY currently has a forward P/E ratio of 12.37, while PFE has a forward P/E of 13.12. We also note that SNY has a PEG ratio of 1.84. 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. PFE currently has a PEG ratio of 2.93.
Another notable valuation metric for SNY is its P/B ratio of 1.59. 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, PFE has a P/B of 3.47.
Based on these metrics and many more, SNY holds a Value grade of A, while PFE has a Value grade of D.
SNY stands above PFE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SNY is the superior value option right now.
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