Investors looking for stocks in the Medical - Drugs sector might want to consider either Catalyst Pharmaceutical (CPRX) or Daiichi Sankyo Co., Ltd. - Sponsored ADR (DSNKY). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Catalyst Pharmaceutical is sporting a Zacks Rank of #2 (Buy), while Daiichi Sankyo Co., Ltd. - Sponsored ADR has a Zacks Rank of #5 (Strong Sell). This means that CPRX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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 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.
CPRX currently has a forward P/E ratio of 9.66, while DSNKY has a forward P/E of 20.22. We also note that CPRX has a PEG ratio of 0.82. 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. DSNKY currently has a PEG ratio of 1.18.
Another notable valuation metric for CPRX is its P/B ratio of 3.11. 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, DSNKY has a P/B of 4.28.
These are just a few of the metrics contributing to CPRX's Value grade of A and DSNKY's Value grade of D.
CPRX has seen stronger estimate revision activity and sports more attractive valuation metrics than DSNKY, so it seems like value investors will conclude that CPRX is the superior option right now.
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Catalyst Pharmaceuticals, Inc. (CPRX): Free Stock Analysis Report Daiichi Sankyo Co., Ltd. - Sponsored ADR (DSNKY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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