Investors looking for stocks in the Medical - Instruments sector might want to consider either Integra LifeSciences (IART) or Masimo (MASI). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Integra LifeSciences has a Zacks Rank of #2 (Buy), while Masimo has a Zacks Rank of #3 (Hold). This means that IART's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
IART currently has a forward P/E ratio of 5.83, while MASI has a forward P/E of 30.94. We also note that IART has a PEG ratio of 0.99. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MASI currently has a PEG ratio of 1.81.
Another notable valuation metric for IART is its P/B ratio of 1.05. 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, MASI has a P/B of 11.85.
Based on these metrics and many more, IART holds a Value grade of A, while MASI has a Value grade of D.
IART has seen stronger estimate revision activity and sports more attractive valuation metrics than MASI, so it seems like value investors will conclude that IART is the superior option right now.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Integra LifeSciences Holdings Corporation (IART): Free Stock Analysis Report
Masimo Corporation (MASI): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).