Investors looking for stocks in the Medical - Dental Supplies sector might want to consider either The Cooper Companies (COO) or Merit Medical (MMSI). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, The Cooper Companies is sporting a Zacks Rank of #2 (Buy), while Merit Medical has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that COO likely has seen a stronger improvement to its earnings outlook than MMSI has recently. However, value investors will care about much more than just this.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
COO currently has a forward P/E ratio of 18.10, while MMSI has a forward P/E of 24.27. We also note that COO has a PEG ratio of 1.79. 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 2.39.
Another notable valuation metric for COO is its P/B ratio of 1.77. 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, MMSI has a P/B of 3.51.
These metrics, and several others, help COO earn a Value grade of B, while MMSI has been given a Value grade of C.
COO has seen stronger estimate revision activity and sports more attractive valuation metrics than MMSI, so it seems like value investors will conclude that COO is the superior option right now.
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The Cooper Companies, Inc. (COO): 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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