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

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Investors with an interest in Medical - Drugs stocks have likely encountered both Sandoz Group AG Sponsored ADR (SDZNY - Free Report) and Zoetis (ZTS - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Sandoz Group AG Sponsored ADR has a Zacks Rank of #2 (Buy), while Zoetis 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 SDZNY is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

SDZNY currently has a forward P/E ratio of 17.91, while ZTS has a forward P/E of 23.28. We also note that SDZNY has a PEG ratio of 0.98. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ZTS currently has a PEG ratio of 2.42.

Another notable valuation metric for SDZNY is its P/B ratio of 3.17. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ZTS has a P/B of 13.14.

These metrics, and several others, help SDZNY earn a Value grade of B, while ZTS has been given a Value grade of C.

SDZNY is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that SDZNY is likely the superior value option right now.


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Zoetis Inc. (ZTS) - free report >>

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