Investors with an interest in Medical - Products stocks have likely encountered both Haemonetics (HAE) and Stryker (SYK). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Both Haemonetics and Stryker have a Zacks Rank of # 2 (Buy) right now. 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. But this is just one piece of the puzzle for value investors.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
HAE currently has a forward P/E ratio of 25.99, while SYK has a forward P/E of 29.10. We also note that HAE has a PEG ratio of 2.60. 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. SYK currently has a PEG ratio of 2.99.
Another notable valuation metric for HAE is its P/B ratio of 5.58. 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, SYK has a P/B of 6.64.
Based on these metrics and many more, HAE holds a Value grade of B, while SYK has a Value grade of C.
Both HAE and SYK are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HAE is the superior value option right now.
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