Investors interested in Medical - Instruments stocks are likely familiar with Fresenius (FMS) and Orthofix (OFIX). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Fresenius has a Zacks Rank of #1 (Strong Buy), while Orthofix has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that FMS likely has seen a stronger improvement to its earnings outlook than OFIX has recently. But this is only part of the picture 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.
FMS currently has a forward P/E ratio of 10.64, while OFIX has a forward P/E of 25.59. We also note that FMS has a PEG ratio of 0.51. 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. OFIX currently has a PEG ratio of 2.56.
Another notable valuation metric for FMS is its P/B ratio of 0.84. 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, OFIX has a P/B of 1.07.
Based on these metrics and many more, FMS holds a Value grade of B, while OFIX has a Value grade of C.
FMS sticks out from OFIX in both our Zacks Rank and Style Scores models, so value investors will likely feel that FMS is the better option right now.
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Fresenius Medical Care AG & Co. KGaA (FMS): Free Stock Analysis Report ORTHOFIX MEDICAL INC. (OFIX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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