Investors interested in Medical - Biomedical and Genetics stocks are likely familiar with Fortrea Holdings Inc. (FTRE) and Acadia Pharmaceuticals (ACAD). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Fortrea Holdings Inc. and Acadia Pharmaceuticals are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that FTRE likely has seen a stronger improvement to its earnings outlook than ACAD has recently. 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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
FTRE currently has a forward P/E ratio of 22.52, while ACAD has a forward P/E of 35.71. We also note that FTRE has a PEG ratio of 0.50. 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. ACAD currently has a PEG ratio of 6.42.
Another notable valuation metric for FTRE is its P/B ratio of 2.68. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, ACAD has a P/B of 4.83.
These are just a few of the metrics contributing to FTRE's Value grade of B and ACAD's Value grade of C.
FTRE stands above ACAD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that FTRE 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.
