Investors with an interest in Medical - Biomedical and Genetics stocks have likely encountered both Keros Therapeutics, Inc. (KROS) and Novozymes A/S (NVZMY). 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.
Keros Therapeutics, Inc. has a Zacks Rank of #1 (Strong Buy), while Novozymes A/S has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that KROS likely has seen a stronger improvement to its earnings outlook than NVZMY has recently. But this is just one piece of the puzzle for value investors.
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.
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.
KROS currently has a forward P/E ratio of 9.02, while NVZMY has a forward P/E of 26.74. We also note that KROS has a PEG ratio of 0.38. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. NVZMY currently has a PEG ratio of 1.22.
Another notable valuation metric for KROS is its P/B ratio of 0.75. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, NVZMY has a P/B of 2.38.
These are just a few of the metrics contributing to KROS's Value grade of A and NVZMY's Value grade of C.
KROS sticks out from NVZMY in both our Zacks Rank and Style Scores models, so value investors will likely feel that KROS is the better 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.
