Investors looking for stocks in the Medical - Dental Supplies sector might want to consider either Henry Schein (HSIC - Free Report) or 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Henry Schein has a Zacks Rank of #2 (Buy), while Merit Medical has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that HSIC 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.
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 21.10, while MMSI has a forward P/E of 37.81. We also note that HSIC has a PEG ratio of 2.50. 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 2.93.
Another notable valuation metric for HSIC is its P/B ratio of 4.55. 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, MMSI has a P/B of 4.85.
These are just a few of the metrics contributing to HSIC's Value grade of A and MMSI's Value grade of C.
HSIC stands above MMSI thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HSIC is the superior value option right now.