Most stocks are expensive right now. That's to be expected with major market indexes at or near all-time highs. Amid the premium prices, though, there are still a few bargains to be found.

Two drugmakers -- AbbVie (NYSE:ABBV) and Viatris (NASDAQ:VTRS) -- especially stand out due to their attractive valuations. Which is the better value stock? Here's how AbbVie and Viatris stack up against each other.

A man wearing a coat and tie with a green dollar sign over one of his outstretched hands and a red dollar sign above the other hand

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Comparing the metrics

You might think that neither AbbVie nor Viatris qualifies as value stocks based on their trailing-12-month price-to-earnings (P/E) ratios. AbbVie's P/E multiple currently stands at 39, while Viatris's P/E ratio is over 28.5. However, it's a much different story when we focus on the future instead of the past.

AbbVie's shares trade at only 8.6 times expected earnings. Viatris claims an even lower forward earnings multiple of 4.3. 

If you prefer to use sales-based valuation metrics, Viatris is the clear winner. Viatris's price-to-sales (P/S) multiple is a super-low 0.7. AbbVie's P/S ratio of nearly 3.9 is a lot higher, although it's still at an attractive level.

Some investors like another metric that calculates the ratio of enterprise value (EV) to earnings before interest, taxes, depreciation, and amortization (EBITDA). The two stocks are pretty close on this metric, with AbbVie's EV/EBITDA of 21.5 just a little higher than Viatris's multiple of nearly 21.

Behind their low valuations

Determining which stock is a bigger bargain isn't quite as simple as just comparing commonly used valuation metrics. Some stocks are cheap for only a season, while others are cheap for a reason. It's better to buy the former rather than the latter.

AbbVie is less expensive than most of its peers primarily because of concerns about its top-selling drug Humira. The blockbuster autoimmune disease drug generated more than 40% of AbbVie's total revenue last year. However, Humira loses U.S. patent exclusivity in 2023. 

While investors are worried about the impact of declining sales for Humira with AbbVie, Viatris's product lineup is chock-full of drugs that are past their prime. Viatris was formed by the combination of Pfizer's Upjohn unit and Mylan. Upjohn was home to Pfizer's drugs that have already lost exclusivity and for which sales are falling, notably including Lipitor and Lyrica. 

AbbVie thinks that it will be able to quickly move past the hit that it will take from Humira's loss of exclusivity. The company is counting on strong growth from other products, including new autoimmune disease drugs Rinvoq and Skyrizi, to offset the revenue declines for Humira.

Viatris expects a "trough year" in 2021. However, the drugmaker expects to achieve over $1 billion in cost synergies over the next three years from the merger of Upjohn and Mylan. It projects "modest and durable" revenue growth beginning in 2024. 

Better value stock?

My view is that while Viatris has a lower valuation based on nearly any metric you use, AbbVie is the better value stock. Actually, I think that AbbVie is the best value stock on the market right now.

I'm not all that concerned about the looming loss of exclusivity for Humira. AbbVie should deliver strong sales growth in 2021 and 2022. Sure, total sales will almost certainly decline in 2023 as biosimilars to Humira enter the U.S. market. However, I believe AbbVie's projections of a return to modest growth in 2024 followed by strong growth for the rest of the decade make sense.

Some might be anxious that the U.S. Food and Drug Administration (FDA) has pushed back the review period for Rinvoq for AbbVie's regulatory filings for atopic dermatitis and psoriatic arthritis. I still expect the drug will win approvals for the indications, though. 

AbbVie should easily deliver stronger revenue and earnings growth than Viatris will. It also offers an attractive dividend with a long track record of dividend increases. Viatris expects to initiate its dividend program in the second quarter. However, its projected dividend yield of around 2.4% is well below AbbVie's yield of nearly 5%. In my opinion, AbbVie is clearly the better pick between these two value stocks.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.