SNY or NVO: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Large Cap Pharmaceuticals sector have probably already heard of Sanofi (SNY) and Novo Nordisk (NVO). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Both Sanofi and Novo Nordisk have a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
SNY currently has a forward P/E ratio of 11.14, while NVO has a forward P/E of 33.22. We also note that SNY has a PEG ratio of 1.14. 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. NVO currently has a PEG ratio of 1.76.
Another notable valuation metric for SNY is its P/B ratio of 1.64. 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, NVO has a P/B of 30.27.
These are just a few of the metrics contributing to SNY's Value grade of B and NVO's Value grade of C.
Both SNY and NVO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SNY is the superior value option right now.
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Sanofi (SNY) : Free Stock Analysis Report
Novo Nordisk A/S (NVO) : Free Stock Analysis Report
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