Investors interested in stocks from the Medical - Drugs sector have probably already heard of Takeda Pharmaceutical Co. (TAK) and Daiichi Sankyo Co., Ltd. - Sponsored ADR (DSNKY). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Takeda Pharmaceutical Co. and Daiichi Sankyo Co., Ltd. - Sponsored ADR are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This means that TAK'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.
TAK currently has a forward P/E ratio of 8.64, while DSNKY has a forward P/E of 21.73. We also note that TAK has a PEG ratio of 0.25. 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. DSNKY currently has a PEG ratio of 1.25.
Another notable valuation metric for TAK is its P/B ratio of 0.94. 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, DSNKY has a P/B of 4.
These metrics, and several others, help TAK earn a Value grade of A, while DSNKY has been given a Value grade of C.
TAK stands above DSNKY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TAK is the superior value option right now.
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Takeda Pharmaceutical Co. (TAK): 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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