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Investors interested in Medical - Biomedical and Genetics stocks are likely familiar with Jazz Pharmaceuticals (JAZZ) and argenex SE (ARGX). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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.
Jazz Pharmaceuticals and argenex SE are both sporting a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.
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 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.
JAZZ currently has a forward P/E ratio of 4.35, while ARGX has a forward P/E of 46.77. We also note that JAZZ has a PEG ratio of 0.60. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ARGX currently has a PEG ratio of 1.44.
Another notable valuation metric for JAZZ is its P/B ratio of 1.50. 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, ARGX has a P/B of 6.49.
These metrics, and several others, help JAZZ earn a Value grade of A, while ARGX has been given a Value grade of C.
Both JAZZ and ARGX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that JAZZ is the superior value option right now.
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Jazz Pharmaceuticals PLC (JAZZ) : Free Stock Analysis Report
argenex SE (ARGX) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).