Investors looking for stocks in the Medical - Drugs sector might want to consider either Catalyst Pharmaceutical (CPRX) or Neurocrine Biosciences (NBIX). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Catalyst Pharmaceutical and Neurocrine Biosciences are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CPRX has an improving earnings outlook. 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.
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.
CPRX currently has a forward P/E ratio of 11.09, while NBIX has a forward P/E of 32.88. We also note that CPRX has a PEG ratio of 0.98. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. NBIX currently has a PEG ratio of 1.28.
Another notable valuation metric for CPRX is its P/B ratio of 3.82. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, NBIX has a P/B of 4.86.
These are just a few of the metrics contributing to CPRX's Value grade of A and NBIX's Value grade of C.
CPRX has seen stronger estimate revision activity and sports more attractive valuation metrics than NBIX, so it seems like value investors will conclude that CPRX is the superior option right now.
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Catalyst Pharmaceuticals, Inc. (CPRX): Free Stock Analysis Report Neurocrine Biosciences, Inc. (NBIX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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