GSK or NVO: Which Is the Better Value Stock Right Now?
GSK vs. NVO: Which Stock Is the Better Value Option?
Investors interested in Large Cap Pharmaceuticals stocks are likely familiar with GlaxoSmithKline (GSK) and Novo Nordisk (NVO). 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.
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.
GlaxoSmithKline and Novo Nordisk are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that GSK likely has seen a stronger improvement to its earnings outlook than NVO has recently. But this is just one factor that value investors are interested in.
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.
GSK currently has a forward P/E ratio of 13.78, while NVO has a forward P/E of 31.02. We also note that GSK has a PEG ratio of 2.02. 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. NVO currently has a PEG ratio of 2.88.
Another notable valuation metric for GSK is its P/B ratio of 3.46. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, NVO has a P/B of 22.29.
Based on these metrics and many more, GSK holds a Value grade of A, while NVO has a Value grade of C.
GSK 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 GSK is likely the superior value option right now.
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GlaxoSmithKline plc (GSK): Free Stock Analysis Report
Novo Nordisk AS (NVO): Free Stock Analysis Report
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