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ABBV or LLY: Which Is the Better Value Stock Right Now?

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Investors with an interest in Large Cap Pharmaceuticals stocks have likely encountered both AbbVie (ABBV - Free Report) and Eli Lilly (LLY - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 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.

Right now, AbbVie is sporting a Zacks Rank of #2 (Buy), while Eli Lilly 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 ABBV has an improving earnings outlook. 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 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.

ABBV currently has a forward P/E ratio of 8.76, while LLY has a forward P/E of 24.84. We also note that ABBV has a PEG ratio of 1.82. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. LLY currently has a PEG ratio of 2.04.

Another notable valuation metric for ABBV is its P/B ratio of 12.56. 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, LLY has a P/B of 38.63.

Based on these metrics and many more, ABBV holds a Value grade of B, while LLY has a Value grade of C.

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


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