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ALC or EW: Which Is the Better Value Stock Right Now?

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Investors interested in Medical - Instruments stocks are likely familiar with Alcon (ALC - Free Report) and Edwards Lifesciences (EW - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, both Alcon and Edwards Lifesciences are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

ALC currently has a forward P/E ratio of 27.72, while EW has a forward P/E of 34.21. We also note that ALC has a PEG ratio of 1.96. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. EW currently has a PEG ratio of 5.02.

Another notable valuation metric for ALC is its P/B ratio of 1.79. 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, EW has a P/B of 8.67.

Based on these metrics and many more, ALC holds a Value grade of B, while EW has a Value grade of C.

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


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