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PBH vs. SYK: Which Stock Is the Better Value Option?
Investors interested in Medical - Products stocks are likely familiar with Prestige Consumer Healthcare (PBH - Free Report) and Stryker (SYK - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Prestige Consumer Healthcare has a Zacks Rank of #2 (Buy), while Stryker has a Zacks Rank of #3 (Hold) right now. This means that PBH'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 also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
PBH currently has a forward P/E ratio of 15.55, while SYK has a forward P/E of 29.28. We also note that PBH has a PEG ratio of 1.94. 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. SYK currently has a PEG ratio of 2.71.
Another notable valuation metric for PBH is its P/B ratio of 2.03. 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, SYK has a P/B of 6.77.
These are just a few of the metrics contributing to PBH's Value grade of A and SYK's Value grade of C.
PBH 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 PBH is likely the superior value option right now.