Investors interested in stocks from the Medical - Dental Supplies sector have probably already heard of Becton Dickinson (BDX) and West Pharmaceutical Services (WST). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Currently, Becton Dickinson has a Zacks Rank of #2 (Buy), while West Pharmaceutical Services has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BDX has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
BDX currently has a forward P/E ratio of 21.02, while WST has a forward P/E of 49.72. We also note that BDX has a PEG ratio of 2.71. 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. WST currently has a PEG ratio of 3.30.
Another notable valuation metric for BDX is its P/B ratio of 2.86. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, WST has a P/B of 10.13.
Based on these metrics and many more, BDX holds a Value grade of B, while WST has a Value grade of C.
BDX stands above WST thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BDX is the superior value option right now.
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