Investors with an interest in Medical - Biomedical and Genetics stocks have likely encountered both Horizon Pharma (HZNP - Free Report) and Ligand Pharmaceuticals (LGND - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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.
Horizon Pharma and Ligand Pharmaceuticals are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that HZNP likely has seen a stronger improvement to its earnings outlook than LGND has recently. 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.
HZNP currently has a forward P/E ratio of 11.66, while LGND has a forward P/E of 43.66. We also note that HZNP has a PEG ratio of 0.99. 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. LGND currently has a PEG ratio of 1.75.
Another notable valuation metric for HZNP is its P/B ratio of 3.29. 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, LGND has a P/B of 9.52.
Based on these metrics and many more, HZNP holds a Value grade of B, while LGND has a Value grade of D.
HZNP 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 HZNP is likely the superior value option right now.