Investors interested in Large Cap Pharmaceuticals stocks are likely familiar with Sanofi (SNY - Free Report) and Novo Nordisk (NVO - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Sanofi and Novo Nordisk are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This means that SNY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
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.
SNY currently has a forward P/E ratio of 13.69, while NVO has a forward P/E of 21.16. We also note that SNY has a PEG ratio of 1.82. 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. NVO currently has a PEG ratio of 2.21.
Another notable valuation metric for SNY is its P/B ratio of 1.88. 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, NVO has a P/B of 18.
Based on these metrics and many more, SNY holds a Value grade of A, while NVO has a Value grade of C.
SNY 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 SNY is likely the superior value option right now.