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

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Investors interested in Medical - Drugs stocks are likely familiar with 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.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Jazz Pharmaceuticals has a Zacks Rank of #2 (Buy), while Zoetis has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that JAZZ is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

JAZZ currently has a forward P/E ratio of 10.71, while ZTS has a forward P/E of 38.26. We also note that JAZZ has a PEG ratio of 0.77. 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. ZTS currently has a PEG ratio of 3.13.

Another notable valuation metric for JAZZ is its P/B ratio of 2.56. 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 21.25.

Based on these metrics and many more, JAZZ holds a Value grade of A, while ZTS has a Value grade of C.

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


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Jazz Pharmaceuticals PLC (JAZZ) - free report >>

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