Investors with an interest in Medical – Biomedical and Genetics stocks have likely encountered both Anika Therapeutics (ANIK) and Alkermes (ALKS). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Anika Therapeutics has a Zacks Rank of #2 (Buy), while Alkermes has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ANIK has an improving earnings outlook. 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.
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.
ANIK currently has a forward P/E ratio of 37.66, while ALKS has a forward P/E of 191.25. We also note that ANIK has a PEG ratio of 3.77. 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. ALKS currently has a PEG ratio of 71.63.
Another notable valuation metric for ANIK is its P/B ratio of 1.63. 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, ALKS has a P/B of 2.80.
Based on these metrics and many more, ANIK holds a Value grade of B, while ALKS has a Value grade of C.
ANIK sticks out from ALKS in both our Zacks Rank and Style Scores models, so value investors will likely feel that ANIK is the better option right now.
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