Investors with an interest in Medical - Dental Supplies stocks have likely encountered both Henry Schein (HSIC - Free Report) and Align Technology (ALGN - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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, both Henry Schein and Align Technology 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 only part of the picture 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.
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.
HSIC currently has a forward P/E ratio of 19.27, while ALGN has a forward P/E of 70.46. We also note that HSIC has a PEG ratio of 1.88. 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. ALGN currently has a PEG ratio of 2.34.
Another notable valuation metric for HSIC is its P/B ratio of 4.19. 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, ALGN has a P/B of 22.92.
These metrics, and several others, help HSIC earn a Value grade of B, while ALGN has been given a Value grade of D.
Both HSIC and ALGN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HSIC is the superior value option right now.