Investors interested in stocks from the Large Cap Pharmaceuticals sector have probably already heard of Novo Nordisk (NVO) and Eli Lilly (LLY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Novo Nordisk and Eli Lilly are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that NVO is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

NVO currently has a forward P/E ratio of 19.80, while LLY has a forward P/E of 34.66. We also note that NVO has a PEG ratio of 0.82. 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. LLY currently has a PEG ratio of 1.31.

Another notable valuation metric for NVO is its P/B ratio of 16.64. 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 54.11.

Based on these metrics and many more, NVO holds a Value grade of B, while LLY has a Value grade of D.

NVO 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 NVO is likely the superior value option right now.

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Novo Nordisk A/S (NVO) : Free Stock Analysis Report

Eli Lilly and Company (LLY) : Free Stock Analysis Report

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

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