Investors with an interest in Medical - Instruments stocks have likely encountered both Hologic (HOLX) and Idexx Laboratories (IDXX). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Hologic has a Zacks Rank of #2 (Buy), while Idexx Laboratories 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 HOLX has an improving earnings outlook. But this is only part of the picture 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.
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.
HOLX currently has a forward P/E ratio of 15.95, while IDXX has a forward P/E of 50.91. We also note that HOLX has a PEG ratio of 2.45. 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. IDXX currently has a PEG ratio of 4.16.
Another notable valuation metric for HOLX is its P/B ratio of 3.1. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, IDXX has a P/B of 35.04.
Based on these metrics and many more, HOLX holds a Value grade of B, while IDXX has a Value grade of D.
HOLX 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 HOLX is likely the superior value option right now.
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Hologic, Inc. (HOLX): Free Stock Analysis Report IDEXX Laboratories, Inc. (IDXX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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