Investors interested in stocks from the Medical - Dental Supplies sector have probably already heard of Henry Schein (HSIC - Free Report) and Merit Medical (MMSI - 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Both Henry Schein and Merit Medical have a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle for value investors.
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.
HSIC currently has a forward P/E ratio of 18.51, while MMSI has a forward P/E of 33.68. We also note that HSIC has a PEG ratio of 1.81. 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. MMSI currently has a PEG ratio of 2.61.
Another notable valuation metric for HSIC is its P/B ratio of 4.02. 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, MMSI has a P/B of 4.05.
These are just a few of the metrics contributing to HSIC's Value grade of B and MMSI's Value grade of C.
Both HSIC and MMSI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HSIC is the superior value option right now.