Which stock currently offers the better value?

Investors interested in large-cap pharmaceutical stocks have probably heard of Pfizer (PFE) and Novo Nordisk (NVO). But which of these two stocks currently offers value investors the better value for money? We need to take a closer look.

Everyone has their own methods for finding great value opportunities, but our model involves combining an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank highlights companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Pfizer has a Zacks Rank of #2 (Buy), while Novo Nordisk has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive earnings estimate revisions, so investors can be confident that PFE has an improving earnings outlook. However, value investors will be interested in much more than just this.

Value investors are also interested in a number of proven valuation metrics that show when a company is undervalued at its current share price level.

Our Value category evaluates stocks using a number of key metrics, including the tried-and-true P/E, P/S, earnings yield and cash flow per share, as well as a number of other fundamental metrics commonly used by value investors.

PFE currently has a forward P/E ratio of 12.03, while NVO has a forward P/E ratio of 40.79. We also note that PFE has a PEG ratio of 1.12. 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. NVO currently has a PEG ratio of 1.39.

Another important valuation metric for PFE is its P/B ratio of 1.75. The P/B ratio compares a stock’s market value to its book value, which is defined as total assets minus total liabilities. For comparison, NVO has a P/B ratio of 43.56.

These are just some of the metrics that contribute to the B score for PFE and the D score for NVO.

PFE stands out from the crowd in both our Zacks Rank and Style Scores models, so value investors likely consider PFE the better option right now.

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Pfizer Inc. (PFE): Free Stock Analysis Report

Novo Nordisk A/S (NVO): Free Stock Analysis Report

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