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SNY vs. NVO: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Large Cap Pharmaceuticals sector have probably already heard of Sanofi (SNY - Free Report) and Novo Nordisk (NVO - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.

Sanofi has a Zacks Rank of #2 (Buy), while Novo Nordisk has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that SNY likely has seen a stronger improvement to its earnings outlook than NVO has recently. 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.

SNY currently has a forward P/E ratio of 14.50, while NVO has a forward P/E of 22.76. We also note that SNY has a PEG ratio of 1.93. 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 2.37.

Another notable valuation metric for SNY is its P/B ratio of 1.91. 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 17.37.

Based on these metrics and many more, SNY holds a Value grade of A, while NVO has a Value grade of D.

SNY stands above NVO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SNY is the superior value option right now.


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