Investors with an interest in Medical - Drugs stocks have likely encountered both Grifols (GRFS) and Ionis Pharmaceuticals (IONS). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Grifols has a Zacks Rank of #2 (Buy), while Ionis Pharmaceuticals has a Zacks Rank of #3 (Hold) right now. This means that GRFS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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 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.
GRFS currently has a forward P/E ratio of 17.39, while IONS has a forward P/E of 284.39. We also note that GRFS has a PEG ratio of 1.25. 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. IONS currently has a PEG ratio of 33.38.
Another notable valuation metric for GRFS is its P/B ratio of 2.76. 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, IONS has a P/B of 5.63.
These are just a few of the metrics contributing to GRFS's Value grade of A and IONS's Value grade of D.
GRFS has seen stronger estimate revision activity and sports more attractive valuation metrics than IONS, so it seems like value investors will conclude that GRFS is the superior option right now.