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

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Investors interested in stocks from the Medical - Drugs sector have probably already heard of Takeda Pharmaceutical Co. (TAK - Free Report) and Zoetis (ZTS - 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.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Takeda Pharmaceutical Co. has a Zacks Rank of #2 (Buy), while Zoetis has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TAK has an improving earnings outlook. However, value investors will care about much more than just this.

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 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.

TAK currently has a forward P/E ratio of 6.30, while ZTS has a forward P/E of 34. We also note that TAK has a PEG ratio of 0.58. 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 2.97.

Another notable valuation metric for TAK is its P/B ratio of 0.90. 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 17.39.

These are just a few of the metrics contributing to TAK's Value grade of A and ZTS's Value grade of C.

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


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Zoetis Inc. (ZTS) - free report >>

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