Investors looking for stocks in the Medical - Dental Supplies sector might want to consider either Dentsply International (XRAY - Free Report) or Conmed (CNMD - 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.
Dentsply International has a Zacks Rank of #2 (Buy), while Conmed has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that XRAY likely has seen a stronger improvement to its earnings outlook than CNMD has recently. 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.
XRAY currently has a forward P/E ratio of 21.68, while CNMD has a forward P/E of 33.71. We also note that XRAY has a PEG ratio of 2.25. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CNMD currently has a PEG ratio of 2.93.
Another notable valuation metric for XRAY is its P/B ratio of 2.18. 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, CNMD has a P/B of 3.50.
These metrics, and several others, help XRAY earn a Value grade of B, while CNMD has been given a Value grade of C.
XRAY stands above CNMD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that XRAY is the superior value option right now.