Investors looking for stocks in the Medical Services sector might want to consider either Bausch + Lomb (BLCO) or Danaher (DHR). 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Bausch + Lomb and Danaher are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BLCO has an improving earnings outlook. But this is only part of the picture for value investors.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
BLCO currently has a forward P/E ratio of 26.75, while DHR has a forward P/E of 27.39. We also note that BLCO has a PEG ratio of 1.49. 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. DHR currently has a PEG ratio of 3.03.
Another notable valuation metric for BLCO is its P/B ratio of 0.8. 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, DHR has a P/B of 2.91.
These metrics, and several others, help BLCO earn a Value grade of B, while DHR has been given a Value grade of C.
BLCO sticks out from DHR in both our Zacks Rank and Style Scores models, so value investors will likely feel that BLCO is the better option right now.
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Bausch + Lomb Corporation (BLCO): Free Stock Analysis Report Danaher Corporation (DHR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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