Investors looking for stocks in the Large Cap Pharmaceuticals sector might want to consider either Bristol-Myers Squibb (BMY - Free Report) or Astrazeneca (AZN - 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Right now, Bristol-Myers Squibb is sporting a Zacks Rank of #1 (Strong Buy), while Astrazeneca has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BMY has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
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.
BMY currently has a forward P/E ratio of 13.74, while AZN has a forward P/E of 23.95. We also note that BMY has a PEG ratio of 1.48. 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. AZN currently has a PEG ratio of 2.06.
Another notable valuation metric for BMY is its P/B ratio of 6.32. 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, AZN has a P/B of 7.53.
These metrics, and several others, help BMY earn a Value grade of B, while AZN has been given a Value grade of C.
BMY has seen stronger estimate revision activity and sports more attractive valuation metrics than AZN, so it seems like value investors will conclude that BMY is the superior option right now.