Investors with an interest in Medical - Generic Drugs stocks have likely encountered both Akorn (AKRX - Free Report) and Amphastar Pharmaceuticals (AMPH - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Akorn has a Zacks Rank of #2 (Buy), while Amphastar Pharmaceuticals has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that AKRX is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
AKRX currently has a forward P/E ratio of 27.88, while AMPH has a forward P/E of 64.31. We also note that AKRX has a PEG ratio of 1.21. 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. AMPH currently has a PEG ratio of 2.86.
Another notable valuation metric for AKRX is its P/B ratio of 2.45. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, AMPH has a P/B of 2.69.
These are just a few of the metrics contributing to AKRX's Value grade of B and AMPH's Value grade of C.
AKRX has seen stronger estimate revision activity and sports more attractive valuation metrics than AMPH, so it seems like value investors will conclude that AKRX is the superior option right now.