Investors interested in Medical - Biomedical and Genetics stocks are likely familiar with Incyte (INCY) and argenex SE (ARGX). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Incyte is sporting a Zacks Rank of #2 (Buy), while argenex SE has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that INCY has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
INCY currently has a forward P/E ratio of 13.65, while ARGX has a forward P/E of 45.69. We also note that INCY has a PEG ratio of 0.55. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ARGX currently has a PEG ratio of 0.78.
Another notable valuation metric for INCY is its P/B ratio of 3.93. 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, ARGX has a P/B of 7.22.
Based on these metrics and many more, INCY holds a Value grade of B, while ARGX has a Value grade of C.
INCY has seen stronger estimate revision activity and sports more attractive valuation metrics than ARGX, so it seems like value investors will conclude that INCY is the superior option right now.
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Incyte Corporation (INCY): Free Stock Analysis Report argenex SE (ARGX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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