Investors looking for stocks in the Medical - Dental Supplies sector might want to consider either Cooper Cos. (COO - Free Report) or Merit Medical (MMSI - 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, Cooper Cos. has a Zacks Rank of #2 (Buy), while Merit Medical has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that COO likely has seen a stronger improvement to its earnings outlook than MMSI has recently. 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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
COO currently has a forward P/E ratio of 21.82, while MMSI has a forward P/E of 33.23. We also note that COO has a PEG ratio of 2.03. 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 2.58.
Another notable valuation metric for COO is its P/B ratio of 3.97. 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, MMSI has a P/B of 4.26.
These metrics, and several others, help COO earn a Value grade of B, while MMSI has been given a Value grade of C.
COO sticks out from MMSI in both our Zacks Rank and Style Scores models, so value investors will likely feel that COO is the better option right now.