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HOLX vs. SMLR: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Medical - Instruments sector have probably already heard of Hologic (HOLX - Free Report) and Semler Scientific Inc. . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Hologic has a Zacks Rank of #1 (Strong Buy), while Semler Scientific Inc. has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that HOLX likely has seen a stronger improvement to its earnings outlook than SMLR has recently. But this is just one factor that value investors are interested in.

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 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.

HOLX currently has a forward P/E ratio of 9.08, while SMLR has a forward P/E of 46.03. We also note that HOLX has a PEG ratio of 0.59. 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. SMLR currently has a PEG ratio of 1.84.

Another notable valuation metric for HOLX is its P/B ratio of 6.31. 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, SMLR has a P/B of 31.37.

These metrics, and several others, help HOLX earn a Value grade of B, while SMLR has been given a Value grade of C.

HOLX has seen stronger estimate revision activity and sports more attractive valuation metrics than SMLR, so it seems like value investors will conclude that HOLX is the superior option right now.


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