We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
NVS or LLY: Which Is the Better Value Stock Right Now?
Read MoreHide Full Article
Investors looking for stocks in the Large Cap Pharmaceuticals sector might want to consider either Novartis (NVS - Free Report) or Eli Lilly (LLY - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Novartis is sporting a Zacks Rank of #2 (Buy), while Eli Lilly has a Zacks Rank of #3 (Hold). This means that NVS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
NVS currently has a forward P/E ratio of 14.08, while LLY has a forward P/E of 63.07. We also note that NVS has a PEG ratio of 1.55. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. LLY currently has a PEG ratio of 3.15.
Another notable valuation metric for NVS is its P/B ratio of 5.01. 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, LLY has a P/B of 55.12.
These metrics, and several others, help NVS earn a Value grade of A, while LLY has been given a Value grade of D.
NVS stands above LLY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that NVS is the superior value option right now.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
NVS or LLY: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Large Cap Pharmaceuticals sector might want to consider either Novartis (NVS - Free Report) or Eli Lilly (LLY - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Novartis is sporting a Zacks Rank of #2 (Buy), while Eli Lilly has a Zacks Rank of #3 (Hold). This means that NVS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
NVS currently has a forward P/E ratio of 14.08, while LLY has a forward P/E of 63.07. We also note that NVS has a PEG ratio of 1.55. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. LLY currently has a PEG ratio of 3.15.
Another notable valuation metric for NVS is its P/B ratio of 5.01. 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, LLY has a P/B of 55.12.
These metrics, and several others, help NVS earn a Value grade of A, while LLY has been given a Value grade of D.
NVS stands above LLY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that NVS is the superior value option right now.