Investors interested in stocks from the Medical - Biomedical and Genetics sector have probably already heard of Myriad Genetics (MYGN - Free Report) and SWEDISH ORPHAN (SWTUY - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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.
Myriad Genetics has a Zacks Rank of #2 (Buy), while SWEDISH ORPHAN has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that MYGN is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
MYGN currently has a forward P/E ratio of 17.25, while SWTUY has a forward P/E of 19.54. We also note that MYGN has a PEG ratio of 1.67. 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. SWTUY currently has a PEG ratio of 2.64.
Another notable valuation metric for MYGN is its P/B ratio of 2.08. 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, SWTUY has a P/B of 6.81.
Based on these metrics and many more, MYGN holds a Value grade of B, while SWTUY has a Value grade of D.
MYGN 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 MYGN is likely the superior value option right now.