IART or SONVY: Which Is the Better Value Stock Right Now?

Investors looking for stocks in the Medical - Instruments sector might want to consider either Integra LifeSciences (IART) or SONOVA HOLDING (SONVY). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Integra LifeSciences and SONOVA HOLDING are both sporting a Zacks Rank of #2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. 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 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.

IART currently has a forward P/E ratio of 7.37, while SONVY has a forward P/E of 18.16. We also note that IART has a PEG ratio of 1.25. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SONVY currently has a PEG ratio of 3.70.

Another notable valuation metric for IART is its P/B ratio of 1.35. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, SONVY has a P/B of 4.54.

These metrics, and several others, help IART earn a Value grade of B, while SONVY has been given a Value grade of C.

Both IART and SONVY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that IART 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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