Investors looking for stocks in the Medical - Biomedical and Genetics sector might want to consider either Keros Therapeutics, Inc. (KROS) or argenex SE (ARGX). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Keros Therapeutics, Inc. and argenex SE are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that KROS is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
KROS currently has a forward P/E ratio of 9.16, while ARGX has a forward P/E of 47.56. We also note that KROS 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. ARGX currently has a PEG ratio of 0.87.
Another notable valuation metric for KROS is its P/B ratio of 0.89. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, ARGX has a P/B of 8.41.
These metrics, and several others, help KROS earn a Value grade of A, while ARGX has been given a Value grade of C.
KROS has seen stronger estimate revision activity and sports more attractive valuation metrics than ARGX, so it seems like value investors will conclude that KROS is the superior option right now.
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Keros Therapeutics, Inc. (KROS): Free Stock Analysis Report argenex SE (ARGX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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