SGIOY or ZTS: Which Is the Better Value Stock Right Now?

Investors looking for stocks in the Medical - Drugs sector might want to consider either Shionogi & Co., Ltd. Unsponsored ADR (SGIOY) or Zoetis (ZTS). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Shionogi & Co., Ltd. Unsponsored ADR and Zoetis are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that SGIOY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.

SGIOY currently has a forward P/E ratio of 12.10, while ZTS has a forward P/E of 25.44. We also note that SGIOY has a PEG ratio of 1.99. 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. ZTS currently has a PEG ratio of 2.64.

Another notable valuation metric for SGIOY is its P/B ratio of 1.64. 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, ZTS has a P/B of 15.26.

These are just a few of the metrics contributing to SGIOY's Value grade of A and ZTS's Value grade of C.

SGIOY sticks out from ZTS in both our Zacks Rank and Style Scores models, so value investors will likely feel that SGIOY is the better option right now.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research