Investors with an interest in Medical - Biomedical and Genetics stocks have likely encountered both Bristol Myers Squibb (BMY) and Amgen (AMGN). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Bristol Myers Squibb and Amgen are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that BMY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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 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.
BMY currently has a forward P/E ratio of 9.89, while AMGN has a forward P/E of 16.98. We also note that BMY has a PEG ratio of 0.18. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. AMGN currently has a PEG ratio of 3.83.
Another notable valuation metric for BMY is its P/B ratio of 5.99. 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, AMGN has a P/B of 22.25.
These are just a few of the metrics contributing to BMY's Value grade of A and AMGN's Value grade of C.
BMY stands above AMGN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BMY is the superior value option right now.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
