Investors looking for stocks in the Medical – Biomedical and Genetics sector might want to consider either Anika Therapeutics (ANIK) or Alkermes (ALKS). But which of these two stocks presents investors with the better value opportunity right now? Let’s take a closer look.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Anika Therapeutics is sporting 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. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
ANIK currently has a forward P/E ratio of 42.52, while ALKS has a forward P/E of 185.01. We also note that ANIK has a PEG ratio of 4.25. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company’s expected earnings growth rate. ALKS currently has a PEG ratio of 69.29.
Another notable valuation metric for ANIK is its P/B ratio of 1.84. 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 2.71.
These are just a few of the metrics contributing to ANIK’s Value grade of B and ALKS’s Value grade of C.
ANIK 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 ANIK is likely the superior value option right now.
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