Investors interested in stocks from the Medical - Dental Supplies sector have probably already heard of Henry Schein (HSIC - Free Report) and West Pharmaceutical Services (WST - 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.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Henry Schein has a Zacks Rank of #2 (Buy), while West Pharmaceutical Services has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HSIC is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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 20.28, while WST has a forward P/E of 37.88. We also note that HSIC has a PEG ratio of 2.55. 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. WST currently has a PEG ratio of 4.01.
Another notable valuation metric for HSIC is its P/B ratio of 4.37. 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, WST has a P/B of 5.82.
These are just a few of the metrics contributing to HSIC's Value grade of A and WST's Value grade of C.
HSIC 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 HSIC is likely the superior value option right now.