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HRC vs. SRDX: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Medical - Products sector might want to consider either Hill-Rom or SurModics (SRDX - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.

Currently, Hill-Rom has a Zacks Rank of #2 (Buy), while SurModics has a Zacks Rank of #3 (Hold). This means that HRC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

HRC currently has a forward P/E ratio of 19.09, while SRDX has a forward P/E of 175.55. We also note that HRC has a PEG ratio of 2.41. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SRDX currently has a PEG ratio of 17.55.

Another notable valuation metric for HRC is its P/B ratio of 4.17. 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, SRDX has a P/B of 5.31.

These are just a few of the metrics contributing to HRC's Value grade of B and SRDX's Value grade of D.

HRC is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that HRC is likely the superior value option right now.


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