Investors interested in Medical - Biomedical and Genetics stocks are likely familiar with SWEDISH ORPHAN (SWTUY - Free Report) and Ligand Pharmaceuticals (LGND - 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
SWEDISH ORPHAN and Ligand Pharmaceuticals are both sporting a Zacks Rank of #2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.
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.
SWTUY currently has a forward P/E ratio of 22.03, while LGND has a forward P/E of 43.70. We also note that SWTUY has a PEG ratio of 1.69. 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. LGND currently has a PEG ratio of 1.75.
Another notable valuation metric for SWTUY is its P/B ratio of 6.14. 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, LGND has a P/B of 8.45.
Based on these metrics and many more, SWTUY holds a Value grade of B, while LGND has a Value grade of D.
SWTUY and LGND are currently sporting an improving earnings outlook, which makes them stick out in our Zacks Rank model. However, based on the above valuation metrics, we feel that SWTUY is likely the superior value option right now.