Investors interested in stocks from the Medical – Biomedical and Genetics sector have probably already heard of Emergent Biosolutions (EBS) and NeoGenomics (NEO). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
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 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, Emergent Biosolutions is sporting a Zacks Rank of #2 (Buy), while NeoGenomics has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that EBS likely has seen a stronger improvement to its earnings outlook than NEO has recently. However, value investors will care about much more than just this.
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 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.
EBS currently has a forward P/E ratio of 22.82, while NEO has a forward P/E of 153.44. We also note that EBS has a PEG ratio of 1.14. 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. NEO currently has a PEG ratio of 7.67.
Another notable valuation metric for EBS is its P/B ratio of 3.03. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, NEO has a P/B of 6.45.
These are just a few of the metrics contributing to EBS's Value grade of B and NEO's Value grade of D.
EBS 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 EBS is likely the superior value option right now.
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