Investors looking for stocks in the Medical - Drugs sector might want to consider either Grifols (GRFS - Free Report) or Ionis Pharmaceuticals (IONS - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify 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 system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that GRFS is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
GRFS currently has a forward P/E ratio of 17.95, while IONS has a forward P/E of 265.61. We also note that GRFS has a PEG ratio of 1.29. 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. IONS currently has a PEG ratio of 31.18.
Another notable valuation metric for GRFS is its P/B ratio of 2.85. 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 5.25.
These are just a few of the metrics contributing to GRFS's Value grade of B and IONS's Value grade of D.
GRFS 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 GRFS is likely the superior value option right now.