Investors with an interest in Medical - Instruments stocks have likely encountered both Alcon (ALC) and Intuitive Surgical, Inc. (ISRG). 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.
Alcon and Intuitive Surgical, Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that ALC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
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.
ALC currently has a forward P/E ratio of 23.88, while ISRG has a forward P/E of 63.22. We also note that ALC has a PEG ratio of 2.33. 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. ISRG currently has a PEG ratio of 4.03.
Another notable valuation metric for ALC is its P/B ratio of 1.65. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ISRG has a P/B of 11.45.
These are just a few of the metrics contributing to ALC's Value grade of B and ISRG's Value grade of D.
ALC stands above ISRG thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ALC is the superior value option right now.
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Alcon (ALC): Free Stock Analysis Report Intuitive Surgical, Inc. (ISRG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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