Investors interested in stocks from the Medical - Instruments sector have probably already heard of RTI Surgical (RTIX - Free Report) and Abiomed (ABMD - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
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.
Right now, RTI Surgical is sporting a Zacks Rank of #2 (Buy), while Abiomed has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that RTIX has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
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.
RTIX currently has a forward P/E ratio of 42.73, while ABMD has a forward P/E of 96.30. We also note that RTIX has a PEG ratio of 2.85. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ABMD currently has a PEG ratio of 3.57.
Another notable valuation metric for RTIX is its P/B ratio of 1.69. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ABMD has a P/B of 23.39.
These metrics, and several others, help RTIX earn a Value grade of A, while ABMD has been given a Value grade of D.
RTIX is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that RTIX is likely the superior value option right now.