Investors looking for stocks in the Medical - Dental Supplies sector might want to consider either Conmed (CNMD) 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Both Conmed and Merit Medical have a Zacks Rank of #2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one factor that value investors are interested in.
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 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.
CNMD currently has a forward P/E ratio of 9.88, while MMSI has a forward P/E of 23.47. We also note that CNMD has a PEG ratio of 1.50. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MMSI currently has a PEG ratio of 2.39.
Another notable valuation metric for CNMD is its P/B ratio of 1.36. 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, MMSI has a P/B of 3.35.
These are just a few of the metrics contributing to CNMD's Value grade of A and MMSI's Value grade of C.
Both CNMD and MMSI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CNMD is the superior value option right now.
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CONMED Corporation (CNMD): 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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