Investors with an interest in Medical - Instruments stocks have likely encountered both Globus Medical (GMED) and Penumbra (PEN). 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.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Globus Medical is sporting a Zacks Rank of #2 (Buy), while Penumbra has a Zacks Rank of #3 (Hold). This means that GMED's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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.
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.
GMED currently has a forward P/E ratio of 24.78, while PEN has a forward P/E of 76.27. We also note that GMED has a PEG ratio of 1.73. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. PEN currently has a PEG ratio of 2.37.
Another notable valuation metric for GMED is its P/B ratio of 2.72. 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, PEN has a P/B of 8.29.
These metrics, and several others, help GMED earn a Value grade of B, while PEN has been given a Value grade of D.
GMED stands above PEN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GMED is the superior value option right now.
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Globus Medical, Inc. (GMED): Free Stock Analysis Report Penumbra, Inc. (PEN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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