Investors with an interest in Medical - Drugs stocks have likely encountered both Grifols (GRFS) and Neurocrine Biosciences (NBIX). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
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.
Grifols and Neurocrine Biosciences are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that GRFS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
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.
GRFS currently has a forward P/E ratio of 9.99, while NBIX has a forward P/E of 30.11. We also note that GRFS has a PEG ratio of 0.35. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. NBIX currently has a PEG ratio of 0.96.
Another notable valuation metric for GRFS is its P/B ratio of 0.81. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, NBIX has a P/B of 4.89.
These are just a few of the metrics contributing to GRFS's Value grade of A and NBIX's Value grade of C.
GRFS has seen stronger estimate revision activity and sports more attractive valuation metrics than NBIX, so it seems like value investors will conclude that GRFS is the superior option right now.
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Grifols, S.A. (GRFS): Free Stock Analysis Report Neurocrine Biosciences, Inc. (NBIX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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