PFE vs. NVO: Which Stock Is the Better Value Option?
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Investors interested in stocks from the Large Cap Pharmaceuticals sector have probably already heard of Pfizer (PFE) and Novo Nordisk (NVO). 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Pfizer has a Zacks Rank of #2 (Buy), while Novo Nordisk has a Zacks Rank of #3 (Hold). This means that PFE's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
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.
PFE currently has a forward P/E ratio of 8.57, while NVO has a forward P/E of 32.52. We also note that PFE has a PEG ratio of 0.80. 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. NVO currently has a PEG ratio of 1.35.
Another notable valuation metric for PFE is its P/B ratio of 1.53. 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, NVO has a P/B of 26.59.
These are just a few of the metrics contributing to PFE's Value grade of A and NVO's Value grade of C.
PFE sticks out from NVO in both our Zacks Rank and Style Scores models, so value investors will likely feel that PFE is the better option right now.
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Pfizer Inc. (PFE) : Free Stock Analysis Report
Novo Nordisk A/S (NVO) : Free Stock Analysis Report