VTRS vs. DHR: Which Stock Is the Better Value Option?

Investors interested in Medical Services stocks are likely familiar with Viatris (VTRS) and Danaher (DHR). But which of these two companies is the best option for those looking for undervalued stocks? 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 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.

Currently, Viatris has a Zacks Rank of #2 (Buy), while Danaher has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that VTRS likely has seen a stronger improvement to its earnings outlook than DHR has recently. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.

VTRS currently has a forward P/E ratio of 6.22, while DHR has a forward P/E of 21.09. We also note that VTRS has a PEG ratio of 1.35. 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. DHR currently has a PEG ratio of 2.27.

Another notable valuation metric for VTRS is its P/B ratio of 1.22. 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, DHR has a P/B of 2.38.

These metrics, and several others, help VTRS earn a Value grade of A, while DHR has been given a Value grade of D.

VTRS sticks out from DHR in both our Zacks Rank and Style Scores models, so value investors will likely feel that VTRS is the better option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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