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TMO or ABMD: Which Is the Better Value Stock Right Now?

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Investors with an interest in Medical - Instruments stocks have likely encountered both Thermo Fisher Scientific (TMO - Free Report) and Abiomed . But which of these two companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Thermo Fisher Scientific and Abiomed are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. Investors should feel comfortable knowing that TMO likely has seen a stronger improvement to its earnings outlook than ABMD has recently. But this is just one factor that value investors are interested in.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.

TMO currently has a forward P/E ratio of 21.37, while ABMD has a forward P/E of 52.07. We also note that TMO has a PEG ratio of 1.71. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ABMD currently has a PEG ratio of 1.87.

Another notable valuation metric for TMO is its P/B ratio of 3.79. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, ABMD has a P/B of 13.57.

These metrics, and several others, help TMO earn a Value grade of B, while ABMD has been given a Value grade of D.

TMO 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 TMO is likely the superior value option right now.


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