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JAZZ or ZTS: Which Is the Better Value Stock Right Now?

Zacks

Investors interested in stocks from the Medical – Drugs sector have probably already heard of Jazz Pharmaceuticals (JAZZ) and Zoetis (ZTS). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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, Jazz Pharmaceuticals is sporting a Zacks Rank of #2 (Buy), while Zoetis has a Zacks Rank of #3 (Hold). 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 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.


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 12.66, while ZTS has a forward P/E of 30.16. We also note that JAZZ has a PEG ratio of 0.81. 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 1.76.

Another notable valuation metric for JAZZ is its P/B ratio of 3.49. 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, ZTS has a P/B of 22.50.

These are just a few of the metrics contributing to JAZZ’s Value grade of B and ZTS’s Value grade of C.

JAZZ has seen stronger estimate revision activity and sports more attractive valuation metrics than ZTS, so it seems like value investors will conclude that JAZZ is the superior option right now.


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