TAK vs. DSNKY: Which Stock Should Value Investors Buy Now?
Investors interested in Medical - Drugs stocks are likely familiar with Takeda Pharmaceutical Co. (TAK) and Daiichi Sankyo Co., Ltd. - Sponsored ADR (DSNKY). But which of these two stocks presents investors with the better value opportunity right now? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both Takeda Pharmaceutical Co. and Daiichi Sankyo Co., Ltd. - Sponsored ADR are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.
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.
TAK currently has a forward P/E ratio of 9.51, while DSNKY has a forward P/E of 27.68. We also note that TAK has a PEG ratio of 0.27. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. DSNKY currently has a PEG ratio of 1.60.
Another notable valuation metric for TAK is its P/B ratio of 0.98. 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, DSNKY has a P/B of 4.32.
Based on these metrics and many more, TAK holds a Value grade of A, while DSNKY has a Value grade of C.
Both TAK and DSNKY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that TAK is the superior value option right now.
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Takeda Pharmaceutical Co. (TAK) : Free Stock Analysis Report
Daiichi Sankyo Co., Ltd. - Sponsored ADR (DSNKY) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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