Investors interested in stocks from the Medical – Biomedical and Genetics sector have probably already heard of Horizon Therapeutics (HZNP) and Techne (TECH). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Horizon Therapeutics has a Zacks Rank of #2 (Buy), while Techne has a Zacks Rank of #3 (Hold). This means that HZNP’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
HZNP currently has a forward P/E ratio of 16.65, while TECH has a forward P/E of 48.83. We also note that HZNP has a PEG ratio of 1.31. 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. TECH currently has a PEG ratio of 1.88.
Another notable valuation metric for HZNP is its P/B ratio of 4.76. The P/B ratio is used to compare a stock’s market value with its book value, which is defined as total assets minus total liabilities. For comparison, TECH has a P/B of 8.83.
These metrics, and several others, help HZNP earn a Value grade of B, while TECH has been given a Value grade of C.
HZNP stands above TECH thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HZNP is the superior value option right now.
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