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SNY vs. NVO: Which Stock Is the Better Value Option?
Investors looking for stocks in the Large Cap Pharmaceuticals sector might want to consider either Sanofi (SNY - Free Report) or Novo Nordisk (NVO - 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.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, both Sanofi and Novo Nordisk are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
SNY currently has a forward P/E ratio of 11.34, while NVO has a forward P/E of 32.89. We also note that SNY has a PEG ratio of 1.17. 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. NVO currently has a PEG ratio of 1.74.
Another notable valuation metric for SNY is its P/B ratio of 1.64. 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, NVO has a P/B of 29.73.
These are just a few of the metrics contributing to SNY's Value grade of B and NVO's Value grade of C.
Both SNY and NVO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SNY is the superior value option right now.