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MD or AVTR: Which Is the Better Value Stock Right Now?
Investors with an interest in Medical Services stocks have likely encountered both Pediatrix Medical Group (MD - Free Report) and Avantor, Inc. (AVTR - 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Pediatrix Medical Group is sporting a Zacks Rank of #2 (Buy), while Avantor, Inc. has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that MD likely has seen a stronger improvement to its earnings outlook than AVTR has recently. However, value investors will care about much more than just this.
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 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.
MD currently has a forward P/E ratio of 10.73, while AVTR has a forward P/E of 22.88. We also note that MD has a PEG ratio of 1.92. 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. AVTR currently has a PEG ratio of 2.72.
Another notable valuation metric for MD is its P/B ratio of 1.70. 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, AVTR has a P/B of 2.75.
These metrics, and several others, help MD earn a Value grade of A, while AVTR has been given a Value grade of C.
MD sticks out from AVTR in both our Zacks Rank and Style Scores models, so value investors will likely feel that MD is the better option right now.