Investors looking for stocks in the Medical - Products sector might want to consider either GE HealthCare Technologies (GEHC) or Agilent Technologies (A). 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
GE HealthCare Technologies has a Zacks Rank of #2 (Buy), while Agilent Technologies has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GEHC has an improving earnings outlook. But this is just one piece of the puzzle 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
GEHC currently has a forward P/E ratio of 16.21, while A has a forward P/E of 21.33. We also note that GEHC has a PEG ratio of 2.80. 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. A currently has a PEG ratio of 3.62.
Another notable valuation metric for GEHC is its P/B ratio of 3.44. 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, A has a P/B of 5.52.
These are just a few of the metrics contributing to GEHC's Value grade of B and A's Value grade of C.
GEHC has seen stronger estimate revision activity and sports more attractive valuation metrics than A, so it seems like value investors will conclude that GEHC is the superior option right now.
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GE HealthCare Technologies Inc. (GEHC): Free Stock Analysis Report Agilent Technologies, Inc. (A): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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