Investors looking for stocks in the Medical - Drugs sector might want to consider either Grifols (GRFS - Free Report) or Orion OYJ Unsponsored ADR (ORINY - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, Grifols has a Zacks Rank of #2 (Buy), while Orion OYJ Unsponsored ADR has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that GRFS likely has seen a stronger improvement to its earnings outlook than ORINY has recently. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
GRFS currently has a forward P/E ratio of 15.04, while ORINY has a forward P/E of 24.48. We also note that GRFS has a PEG ratio of 1.37. 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. ORINY currently has a PEG ratio of 16.32.
Another notable valuation metric for GRFS is its P/B ratio of 2.31. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ORINY has a P/B of 6.60.
These are just a few of the metrics contributing to GRFS's Value grade of A and ORINY's Value grade of C.
GRFS stands above ORINY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GRFS is the superior value option right now.