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MMSI or ALGN: Which Is the Better Value Stock Right Now?
Investors interested in Medical - Dental Supplies stocks are likely familiar with Merit Medical (MMSI - 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.
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 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.
Merit Medical has a Zacks Rank of #2 (Buy), while Align Technology has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that MMSI likely has seen a stronger improvement to its earnings outlook than ALGN has recently. But this is just one piece of the puzzle for value investors.
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.
MMSI currently has a forward P/E ratio of 24.69, while ALGN has a forward P/E of 31.78. We also note that MMSI has a PEG ratio of 2.24. 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 25.83.
Another notable valuation metric for MMSI is its P/B ratio of 3.65. 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 5.34.
These metrics, and several others, help MMSI earn a Value grade of B, while ALGN has been given a Value grade of C.
MMSI sticks out from ALGN in both our Zacks Rank and Style Scores models, so value investors will likely feel that MMSI is the better option right now.