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

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Investors looking for stocks in the Medical - Drugs sector might want to consider either Jazz Pharmaceuticals (JAZZ - Free Report) or Catalent (CTLT - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Jazz Pharmaceuticals has a Zacks Rank of #2 (Buy), while Catalent has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that JAZZ 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.

JAZZ currently has a forward P/E ratio of 7.81, while CTLT has a forward P/E of 20.09. We also note that JAZZ has a PEG ratio of 0.68. 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. CTLT currently has a PEG ratio of 1.44.

Another notable valuation metric for JAZZ is its P/B ratio of 2.64. 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, CTLT has a P/B of 2.86.

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

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


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