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PDCO vs. WST: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Medical - Dental Supplies sector might want to consider either Patterson Cos. (PDCO - Free Report) or West Pharmaceutical Services (WST). 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.

Both Patterson Cos. and West Pharmaceutical Services have a Zacks Rank of # 2 (Buy) right now. 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 just one factor that value investors are interested in.

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.

PDCO currently has a forward P/E ratio of 16.73, while WST has a forward P/E of 46.97. We also note that PDCO 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 3.35.

Another notable valuation metric for PDCO is its P/B ratio of 1.54. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, WST has a P/B of 7.33.

These metrics, and several others, help PDCO earn a Value grade of A, while WST has been given a Value grade of C.

Both PDCO and WST are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PDCO is the superior value option right now.


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