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

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Investors looking for stocks in the Medical - Drugs sector might want to consider either Jazz Pharmaceuticals (JAZZ - Free Report) or 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Jazz Pharmaceuticals and Zoetis are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that JAZZ likely has seen a stronger improvement to its earnings outlook than ZTS has recently. But this is just one factor that value investors are interested in.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

JAZZ currently has a forward P/E ratio of 8.76, while ZTS has a forward P/E of 31.10. We also note that JAZZ has a PEG ratio of 0.92. 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 2.70.

Another notable valuation metric for JAZZ is its P/B ratio of 2.70. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ZTS has a P/B of 22.34.

These metrics, and several others, help JAZZ earn a Value grade of A, while ZTS has been given a 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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