Investors looking for stocks in the Medical - Dental Supplies sector might want to consider either The Cooper Companies (COO) or Merit Medical (MMSI). 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.
The Cooper Companies and Merit Medical are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that COO likely has seen a stronger improvement to its earnings outlook than MMSI has recently. 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
COO currently has a forward P/E ratio of 18.38, while MMSI has a forward P/E of 23.43. We also note that COO has a PEG ratio of 2.37. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MMSI currently has a PEG ratio of 2.43.
Another notable valuation metric for COO is its P/B ratio of 1.99. 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, MMSI has a P/B of 3.39.
Based on these metrics and many more, COO holds a Value grade of B, while MMSI has a Value grade of C.
COO stands above MMSI thanks to its solid earnings outlook, and based on these valuation figures, we also feel that COO is the superior value option right now.
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The Cooper Companies, Inc. (COO): 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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