JAZZ vs. ZTS: Which Stock Is the Better Value Option?
Investors looking for stocks in the Medical - Drugs sector might want to consider either Jazz Pharmaceuticals (JAZZ) or Zoetis (ZTS). 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Jazz Pharmaceuticals and Zoetis are both sporting a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
JAZZ currently has a forward P/E ratio of 8.33, while ZTS has a forward P/E of 34.10. We also note that JAZZ has a PEG ratio of 1.38. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ZTS currently has a PEG ratio of 3.02.
Another notable valuation metric for JAZZ is its P/B ratio of 2.37. 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 24.18.
These metrics, and several others, help JAZZ earn a Value grade of A, while ZTS has been given a Value grade of C.
Both JAZZ and ZTS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that JAZZ is the superior value option right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.