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GSK vs. LLY: Which Stock Should Value Investors Buy Now?
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Investors looking for stocks in the Large Cap Pharmaceuticals sector might want to consider either GlaxoSmithKline (GSK - Free Report) or 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, GlaxoSmithKline 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 GSK has an improving earnings outlook. 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.
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.
GSK currently has a forward P/E ratio of 13.21, while LLY has a forward P/E of 28.44. We also note that GSK has a PEG ratio of 1.94. 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 2.04.
Another notable valuation metric for GSK is its P/B ratio of 4. 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 29.33.
Based on these metrics and many more, GSK holds a Value grade of A, while LLY has a Value grade of C.
GSK stands above LLY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GSK is the superior value option right now.
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GSK vs. LLY: Which Stock Should Value Investors Buy Now?
Investors looking for stocks in the Large Cap Pharmaceuticals sector might want to consider either GlaxoSmithKline (GSK - Free Report) or 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, GlaxoSmithKline 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 GSK has an improving earnings outlook. 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.
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.
GSK currently has a forward P/E ratio of 13.21, while LLY has a forward P/E of 28.44. We also note that GSK has a PEG ratio of 1.94. 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 2.04.
Another notable valuation metric for GSK is its P/B ratio of 4. 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 29.33.
Based on these metrics and many more, GSK holds a Value grade of A, while LLY has a Value grade of C.
GSK stands above LLY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GSK is the superior value option right now.