Investors interested in Medical - Drugs stocks are likely familiar with USANA Health Sciences (USNA) and United Therapeutics (UTHR). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
USANA Health Sciences and United Therapeutics are sporting Zacks Ranks of #1 (Strong Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that USNA is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
USNA currently has a forward P/E ratio of 10.84, while UTHR has a forward P/E of 16.93. We also note that USNA has a PEG ratio of 0.90. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. UTHR currently has a PEG ratio of 2.52.
Another notable valuation metric for USNA is its P/B ratio of 0.74. 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, UTHR has a P/B of 3.09.
These are just a few of the metrics contributing to USNA's Value grade of A and UTHR's Value grade of C.
USNA sticks out from UTHR in both our Zacks Rank and Style Scores models, so value investors will likely feel that USNA is the better option right now.
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USANA Health Sciences, Inc. (USNA): Free Stock Analysis Report United Therapeutics Corporation (UTHR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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