Investors with an interest in Medical - Drugs stocks have likely encountered both Assertio (ASRT - Free Report) and Pacira (PCRX - 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 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.
Right now, Assertio is sporting a Zacks Rank of #1 (Strong Buy), while Pacira has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ASRT is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
ASRT currently has a forward P/E ratio of 0.86, while PCRX has a forward P/E of 29.80. We also note that ASRT has a PEG ratio of 0.04. 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. PCRX currently has a PEG ratio of 0.95.
Another notable valuation metric for ASRT is its P/B ratio of 0.19. 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, PCRX has a P/B of 5.48.
Based on these metrics and many more, ASRT holds a Value grade of A, while PCRX has a Value grade of C.
ASRT 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 ASRT is likely the superior value option right now.