Investors looking for stocks in the Medical - Dental Supplies sector might want to consider either Henry Schein (HSIC) or Merit Medical (MMSI). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both Henry Schein and Merit Medical are holding a Zacks Rank of #2 (Buy). 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. 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 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.
HSIC currently has a forward P/E ratio of 15.72, while MMSI has a forward P/E of 20.29. We also note that HSIC has a PEG ratio of 1.49. 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. MMSI currently has a PEG ratio of 1.94.
Another notable valuation metric for HSIC is its P/B ratio of 2.46. 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, MMSI has a P/B of 3.1.
Based on these metrics and many more, HSIC holds a Value grade of A, while MMSI has a Value grade of C.
Both HSIC and MMSI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HSIC is the superior value option right now.
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Henry Schein, Inc. (HSIC): Free Stock Analysis Report
Merit Medical Systems, Inc. (MMSI): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).