Investors looking for stocks in the Medical - Dental Supplies sector might want to consider either Dentsply International (XRAY) or Merit Medical (MMSI). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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, Dentsply International has a Zacks Rank of #2 (Buy), while Merit Medical has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that XRAY likely has seen a stronger improvement to its earnings outlook than MMSI 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 7.53, while MMSI has a forward P/E of 24.98. We also note that XRAY has a PEG ratio of 1.02. 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. MMSI currently has a PEG ratio of 2.46.
Another notable valuation metric for XRAY is its P/B ratio of 1.42. 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, MMSI has a P/B of 3.37.
Based on these metrics and many more, XRAY holds a Value grade of A, while MMSI has a Value grade of C.
XRAY 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 XRAY is likely the superior value option right now.
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DENTSPLY SIRONA Inc. (XRAY): Free Stock Analysis Report Merit Medical Systems, Inc. (MMSI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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