Investors looking for stocks in the Medical - Biomedical and Genetics sector might want to consider either Astrazeneca (AZN) or argenex SE (ARGX). 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.
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.
Currently, Astrazeneca has a Zacks Rank of #2 (Buy), while argenex SE has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that AZN likely has seen a stronger improvement to its earnings outlook than ARGX has recently. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
AZN currently has a forward P/E ratio of 15.98, while ARGX has a forward P/E of 52.03. We also note that AZN has a PEG ratio of 1.32. 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. ARGX currently has a PEG ratio of 1.67.
Another notable valuation metric for AZN is its P/B ratio of 5.44. 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, ARGX has a P/B of 7.26.
These are just a few of the metrics contributing to AZN's Value grade of B and ARGX's Value grade of D.
AZN 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 AZN is likely the superior value option right now.
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AstraZeneca PLC (AZN): Free Stock Analysis Report argenex SE (ARGX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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