Investors with an interest in Medical - Biomedical and Genetics stocks have likely encountered both Ligand Pharmaceuticals (LGND - Free Report) and Techne (TECH - 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.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Ligand Pharmaceuticals has a Zacks Rank of #2 (Buy), while Techne has a Zacks Rank of #3 (Hold). This means that LGND'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 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.
LGND currently has a forward P/E ratio of 29.42, while TECH has a forward P/E of 61.36. We also note that LGND has a PEG ratio of 1.96. 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. TECH currently has a PEG ratio of 10.23.
Another notable valuation metric for LGND is its P/B ratio of 2.32. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, TECH has a P/B of 7.77.
Based on these metrics and many more, LGND holds a Value grade of A, while TECH has a Value grade of D.
LGND 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 LGND is likely the superior value option right now.