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PFE vs. LLY: Which Stock Should Value Investors Buy Now?

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Investors interested in Large Cap Pharmaceuticals stocks are likely familiar with Pfizer (PFE - 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Pfizer is sporting a Zacks Rank of #2 (Buy), while Eli Lilly 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 PFE is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

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.

PFE currently has a forward P/E ratio of 13.24, while LLY has a forward P/E of 30.99. We also note that PFE has a PEG ratio of 1.28. 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. LLY currently has a PEG ratio of 1.96.

Another notable valuation metric for PFE is its P/B ratio of 4.07. 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, LLY has a P/B of 29.89.

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

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


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