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CAH vs. ALGN: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Medical - Dental Supplies stocks have likely encountered both Cardinal Health (CAH - Free Report) and Align Technology (ALGN - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Cardinal Health and Align Technology 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 only part of the picture for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

CAH currently has a forward P/E ratio of 9.36, while ALGN has a forward P/E of 102.81. We also note that CAH has a PEG ratio of 1.72. 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. ALGN currently has a PEG ratio of 5.62.

Another notable valuation metric for CAH is its P/B ratio of 10.84. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ALGN has a P/B of 12.42.

These are just a few of the metrics contributing to CAH's Value grade of B and ALGN's Value grade of F.

Both CAH and ALGN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CAH is the superior value option right now.


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