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 is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Takeda Pharmaceutical Co. has a Zacks Rank of #2 (Buy), while Daiichi Sankyo Co., Ltd. - Sponsored ADR has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that TAK likely has seen a stronger improvement to its earnings outlook than DSNKY 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.

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 9.49, while DSNKY has a forward P/E of 31.25. We also note that TAK has a PEG ratio of 0.27. 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. DSNKY currently has a PEG ratio of 1.80.

Another notable valuation metric for TAK is its P/B ratio of 0.98. 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, DSNKY has a P/B of 4.20.

Based on these metrics and many more, TAK holds a Value grade of A, while DSNKY has a Value grade of C.

TAK stands above DSNKY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TAK is the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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