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JAZZ vs. ZTS: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Medical - Drugs sector have probably already heard of Jazz Pharmaceuticals (JAZZ - Free Report) and Zoetis (ZTS - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Jazz Pharmaceuticals is sporting a Zacks Rank of #1 (Strong Buy), while Zoetis has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that JAZZ has an improving earnings outlook. But this is just one factor that value investors are interested in.

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.

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.

JAZZ currently has a forward P/E ratio of 9.48, while ZTS has a forward P/E of 29.25. We also note that JAZZ has a PEG ratio of 0.83. 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. ZTS currently has a PEG ratio of 1.84.

Another notable valuation metric for JAZZ is its P/B ratio of 3.03. 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, ZTS has a P/B of 22.27.

These are just a few of the metrics contributing to JAZZ's Value grade of B and ZTS's Value grade of D.

JAZZ has seen stronger estimate revision activity and sports more attractive valuation metrics than ZTS, so it seems like value investors will conclude that JAZZ is the superior option right now.


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