Back to top

Image: Bigstock

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

Read MoreHide Full Article

Investors with an interest in Medical - Drugs stocks have likely encountered both Jazz Pharmaceuticals (JAZZ - Free Report) and Catalent (CTLT - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Jazz Pharmaceuticals is sporting a Zacks Rank of #2 (Buy), while Catalent has a Zacks Rank of #5 (Strong Sell). Investors should feel comfortable knowing that JAZZ likely has seen a stronger improvement to its earnings outlook than CTLT has recently. But this is only part of the picture for value investors.

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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

JAZZ currently has a forward P/E ratio of 5.76, while CTLT has a forward P/E of 50.38. We also note that JAZZ has a PEG ratio of 1.16. 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. CTLT currently has a PEG ratio of 1.73.

Another notable valuation metric for JAZZ is its P/B ratio of 1.83. 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, CTLT has a P/B of 2.96.

These are just a few of the metrics contributing to JAZZ's Value grade of A and CTLT's Value grade of D.

JAZZ stands above CTLT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that JAZZ is the superior value option right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Jazz Pharmaceuticals PLC (JAZZ) - free report >>

Catalent, Inc. (CTLT) - free report >>

Published in