Investors with an interest in Medical - Drugs stocks have likely encountered both Catalyst Pharmaceutical (CPRX) and Zoetis (ZTS). 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.
Currently, Catalyst Pharmaceutical has a Zacks Rank of #2 (Buy), while Zoetis has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that CPRX likely has seen a stronger improvement to its earnings outlook than ZTS has recently. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
CPRX currently has a forward P/E ratio of 9.50, while ZTS has a forward P/E of 19.12. We also note that CPRX has a PEG ratio of 0.80. 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. ZTS currently has a PEG ratio of 2.11.
Another notable valuation metric for CPRX is its P/B ratio of 3.03. 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, ZTS has a P/B of 9.95.
These are just a few of the metrics contributing to CPRX's Value grade of A and ZTS's Value grade of C.
CPRX has seen stronger estimate revision activity and sports more attractive valuation metrics than ZTS, so it seems like value investors will conclude that CPRX is the superior option right now.
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Zoetis Inc. (ZTS) : Free Stock Analysis Report
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.
