Investors looking for stocks in the Medical - Biomedical and Genetics sector might want to consider either Celgene or Techne (TECH). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Celgene has a Zacks Rank of #2 (Buy), while Techne has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CELG has an improving earnings outlook. However, value investors will care about much more than just this.
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.
CELG currently has a forward P/E ratio of 9.80, while TECH has a forward P/E of 41.49. We also note that CELG has a PEG ratio of 0.50. 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. TECH currently has a PEG ratio of 3.77.
Another notable valuation metric for CELG is its P/B ratio of 6.34. 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, TECH has a P/B of 6.61.
Based on these metrics and many more, CELG holds a Value grade of B, while TECH has a Value grade of D.
CELG sticks out from TECH in both our Zacks Rank and Style Scores models, so value investors will likely feel that CELG is the better option right now.