Back to top

PFE vs. NVO: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors interested in Large Cap Pharmaceuticals stocks are likely familiar with Pfizer (PFE - Free Report) and Novo Nordisk (NVO - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Pfizer and Novo Nordisk are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PFE has an improving earnings outlook. But this is just one factor that value investors are interested in.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

PFE currently has a forward P/E ratio of 14.39, while NVO has a forward P/E of 17.52. We also note that PFE has a PEG ratio of 2.20. 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 2.26.

Another notable valuation metric for PFE is its P/B ratio of 3.66. 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, NVO has a P/B of 13.43.

Based on these metrics and many more, PFE holds a Value grade of B, while NVO has a Value grade of C.

PFE 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 PFE is likely the superior value option right now.




In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Pfizer Inc. (PFE) - free report >>

Novo Nordisk A/S (NVO) - free report >>

More from Zacks Tale of the Tape

You May Like

Published in