Investors interested in Medical - Dental Supplies stocks are likely familiar with Henry Schein (HSIC - Free Report) and Merit Medical (MMSI - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 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.
Currently, both Henry Schein and Merit Medical are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. 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 20.68, while MMSI has a forward P/E of 29.37. We also note that HSIC has a PEG ratio of 2.50. 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. MMSI currently has a PEG ratio of 2.53.
Another notable valuation metric for HSIC is its P/B ratio of 3.12. 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 3.46.
These metrics, and several others, help HSIC earn a Value grade of B, while MMSI has been given a Value grade of C.
Both HSIC and MMSI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HSIC is the superior value option right now.