Investors interested in Medical - Products stocks are likely familiar with Hill-Rom (HRC) and Abaxis . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Hill-Rom has a Zacks Rank of #2 (Buy), while Abaxis has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that HRC likely has seen a stronger improvement to its earnings outlook than ABAX has recently. But this is just one piece of the puzzle for value investors.
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.
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.
HRC currently has a forward P/E ratio of 20.43, while ABAX has a forward P/E of 56.45. We also note that HRC has a PEG ratio of 1.48. 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. ABAX currently has a PEG ratio of 5.51.
Another notable valuation metric for HRC is its P/B ratio of 4.15. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ABAX has a P/B of 6.49.
These metrics, and several others, help HRC earn a Value grade of A, while ABAX has been given a Value grade of D.
HRC sticks out from ABAX in both our Zacks Rank and Style Scores models, so value investors will likely feel that HRC is the better option right now.