Investors with an interest in Medical - Dental Supplies stocks have likely encountered both Merit Medical (MMSI) and West Pharmaceutical Services (WST). 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.
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 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.
Right now, both Merit Medical and West Pharmaceutical Services are sporting a Zacks Rank of #2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
MMSI currently has a forward P/E ratio of 17.05, while WST has a forward P/E of 41.76. We also note that MMSI has a PEG ratio of 1.92. 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 3.00.
Another notable valuation metric for MMSI is its P/B ratio of 2.54. 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 8.48.
These are just a few of the metrics contributing to MMSI's Value grade of B and WST's Value grade of D.
Both MMSI and WST are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MMSI is the superior value option right now.
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Merit Medical Systems, Inc. (MMSI): Free Stock Analysis Report
West Pharmaceutical Services, Inc. (WST): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).