Investors with an interest in Medical - Generic Drugs stocks have likely encountered both Supernus Pharmaceuticals (SUPN) and Teva Pharmaceutical Industries Ltd. (TEVA). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Supernus Pharmaceuticals has a Zacks Rank of #1 (Strong Buy), while Teva Pharmaceutical Industries Ltd. has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that SUPN likely has seen a stronger improvement to its earnings outlook than TEVA has recently. But this is just one piece of the puzzle for value investors.
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.
SUPN currently has a forward P/E ratio of 16.70, while TEVA has a forward P/E of 17.08. We also note that SUPN has a PEG ratio of 0.61. 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. TEVA currently has a PEG ratio of 3.58.
Another notable valuation metric for SUPN is its P/B ratio of 2.64. 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, TEVA has a P/B of 5.16.
These metrics, and several others, help SUPN earn a Value grade of B, while TEVA has been given a Value grade of C.
SUPN 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 SUPN is likely the superior value option right now.
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Supernus Pharmaceuticals, Inc. (SUPN): Free Stock Analysis Report
Teva Pharmaceutical Industries Ltd. (TEVA): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).