Investors interested in stocks from the Medical - Drugs sector have probably already heard of USANA Health Sciences (USNA) and Sandoz Group AG Sponsored ADR (SDZNY). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
USANA Health Sciences has a Zacks Rank of #2 (Buy), while Sandoz Group AG Sponsored ADR has a Zacks Rank of #3 (Hold) right now. This means that USNA's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
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.
USNA currently has a forward P/E ratio of 8.22, while SDZNY has a forward P/E of 20.84. We also note that USNA has a PEG ratio of 0.69. 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 1.86.
Another notable valuation metric for USNA is its P/B ratio of 0.59. 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, SDZNY has a P/B of 4.02.
These metrics, and several others, help USNA earn a Value grade of A, while SDZNY has been given a 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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USANA Health Sciences, Inc. (USNA): Free Stock Analysis Report
Sandoz Group AG Sponsored ADR (SDZNY): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).