JAZZ vs. ZTS: Which Stock Is the Better Value Option?
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Investors interested in Medical - Drugs stocks are likely familiar with Jazz Pharmaceuticals (JAZZ) and Zoetis (ZTS). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Jazz Pharmaceuticals has a Zacks Rank of #1 (Strong Buy), while Zoetis has a Zacks Rank of #2 (Buy) right now. Investors should feel comfortable knowing that JAZZ likely has seen a stronger improvement to its earnings outlook than ZTS has recently. 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
JAZZ currently has a forward P/E ratio of 6.01, while ZTS has a forward P/E of 32.99. We also note that JAZZ has a PEG ratio of 1.20. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ZTS currently has a PEG ratio of 2.99.
Another notable valuation metric for JAZZ is its P/B ratio of 1.92. 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, ZTS has a P/B of 17.70.
Based on these metrics and many more, JAZZ holds a Value grade of A, while ZTS has a Value grade of C.
JAZZ 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 JAZZ is likely the superior value option right now.
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Jazz Pharmaceuticals PLC (JAZZ) : Free Stock Analysis Report
Zoetis Inc. (ZTS) : Free Stock Analysis Report