Investors with an interest in Medical - Biomedical and Genetics stocks have likely encountered both Jazz Pharmaceuticals (JAZZ) and Techne (TECH). But which of these two stocks presents investors with the better value opportunity right now? Let's 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.
Jazz Pharmaceuticals and Techne are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This means that JAZZ's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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.
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.
JAZZ currently has a forward P/E ratio of 10.31, while TECH has a forward P/E of 35.29. We also note that JAZZ has a PEG ratio of 0.20. 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. TECH currently has a PEG ratio of 7.40.
Another notable valuation metric for JAZZ is its P/B ratio of 3.54. 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, TECH has a P/B of 5.41.
Based on these metrics and many more, JAZZ holds a Value grade of B, while TECH has a Value grade of D.
JAZZ sticks out from TECH in both our Zacks Rank and Style Scores models, so value investors will likely feel that JAZZ is the better option right now.
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Jazz Pharmaceuticals PLC (JAZZ): Free Stock Analysis Report
Bio-Techne Corp (TECH): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).