Investors looking for stocks in the Medical - Drugs sector might want to consider either Stevanato Group (STVN) or Madrigal (MDGL). 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.
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 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.
Stevanato Group has a Zacks Rank of #2 (Buy), while Madrigal has a Zacks Rank of #4 (Sell) right now. This means that STVN'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 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.
STVN currently has a forward P/E ratio of 24.26, while MDGL has a forward P/E of 216.74. We also note that STVN has a PEG ratio of 1.42. 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. MDGL currently has a PEG ratio of 4.66.
Another notable valuation metric for STVN is its P/B ratio of 3.11. 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, MDGL has a P/B of 17.44.
These metrics, and several others, help STVN earn a Value grade of B, while MDGL has been given a Value grade of D.
STVN is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that STVN is likely the superior value option right now.
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Stevanato Group S.p.A. (STVN): Free Stock Analysis Report Madrigal Pharmaceuticals, Inc. (MDGL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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