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EYE vs. RMD: Which Stock Should Value Investors Buy Now?

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Investors interested in Medical - Products stocks are likely familiar with National Vision (EYE - Free Report) and ResMed (RMD - 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, National Vision is sporting a Zacks Rank of #2 (Buy), while ResMed has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that EYE has an improving earnings outlook. But this is just one piece of the puzzle 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 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.

EYE currently has a forward P/E ratio of 27.74, while RMD has a forward P/E of 34.36. We also note that EYE has a PEG ratio of 1.43. 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. RMD currently has a PEG ratio of 2.07.

Another notable valuation metric for EYE is its P/B ratio of 1.96. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, RMD has a P/B of 8.61.

These are just a few of the metrics contributing to EYE's Value grade of A and RMD's Value grade of C.

EYE sticks out from RMD in both our Zacks Rank and Style Scores models, so value investors will likely feel that EYE is the better option right now.


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