Investors interested in stocks from the Medical - Products sector have probably already heard of Hill-Rom (HRC - Free Report) and Boston Scientific (BSX - 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Hill-Rom has a Zacks Rank of #2 (Buy), while Boston Scientific has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HRC is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
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 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.
HRC currently has a forward P/E ratio of 18.83, while BSX has a forward P/E of 26.41. We also note that HRC has a PEG ratio of 1.35. 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. BSX currently has a PEG ratio of 2.41.
Another notable valuation metric for HRC is its P/B ratio of 3.97. 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, BSX has a P/B of 6.12.
These metrics, and several others, help HRC earn a Value grade of B, while BSX has been given a Value grade of C.
HRC sticks out from BSX in both our Zacks Rank and Style Scores models, so value investors will likely feel that HRC is the better option right now.