Investors with an interest in Medical - Products stocks have likely encountered both Envista (NVST) and Abbott (ABT). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.
Right now, Envista is sporting a Zacks Rank of #1 (Strong Buy), while Abbott has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that NVST is likely seeing its earnings outlook improve to a greater extent. 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.
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.
NVST currently has a forward P/E ratio of 17.56, while ABT has a forward P/E of 25.43. We also note that NVST has a PEG ratio of 1.04. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ABT currently has a PEG ratio of 2.48.
Another notable valuation metric for NVST is its P/B ratio of 1.04. 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, ABT has a P/B of 4.48.
These metrics, and several others, help NVST earn a Value grade of B, while ABT has been given a Value grade of C.
NVST stands above ABT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that NVST is the superior value option right now.
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Envista Holdings Corporation (NVST): Free Stock Analysis Report Abbott Laboratories (ABT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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