Investors interested in Medical - Generic Drugs stocks are likely familiar with Bausch Health (BHC - Free Report) and Amphastar Pharmaceuticals (AMPH - 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.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Bausch Health has a Zacks Rank of #1 (Strong Buy), while Amphastar Pharmaceuticals has a Zacks Rank of #3 (Hold). This means that BHC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
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 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.
BHC currently has a forward P/E ratio of 6.05, while AMPH has a forward P/E of 103.90. We also note that BHC has a PEG ratio of 0.30. 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 4.16.
Another notable valuation metric for BHC is its P/B ratio of 2.50. 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, AMPH has a P/B of 2.71.
These metrics, and several others, help BHC earn a Value grade of A, while AMPH has been given a Value grade of D.
BHC stands above AMPH thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BHC is the superior value option right now.