USNA vs. SDZNY: Which Stock Is the Better Value Option?

Investors with an interest in Medical - Drugs stocks have likely encountered both USANA Health Sciences (USNA) and Sandoz Group AG Sponsored ADR (SDZNY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, USANA Health Sciences is sporting a Zacks Rank of #1 (Strong Buy), while Sandoz Group AG Sponsored ADR has a Zacks Rank of #2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that USNA is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

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 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.

USNA currently has a forward P/E ratio of 9.09, while SDZNY has a forward P/E of 20.38. We also note that USNA has a PEG ratio of 0.76. 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. SDZNY currently has a PEG ratio of 1.82.

Another notable valuation metric for USNA is its P/B ratio of 0.62. 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, SDZNY has a P/B of 3.99.

These are just a few of the metrics contributing to USNA's Value grade of A and SDZNY's Value grade of C.

USNA is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that USNA is likely the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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