Investors interested in Medical - Instruments stocks are likely familiar with Hologic (HOLX) and SONOVA HOLDING (SONVY). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Currently, Hologic has a Zacks Rank of #2 (Buy), while SONOVA HOLDING has a Zacks Rank of #5 (Strong Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HOLX is likely seeing its earnings outlook improve to a greater extent. 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.
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.
HOLX currently has a forward P/E ratio of 16.63, while SONVY has a forward P/E of 21.70. We also note that HOLX has a PEG ratio of 2.13. 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. SONVY currently has a PEG ratio of 3.29.
Another notable valuation metric for HOLX is its P/B ratio of 3.3. 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, SONVY has a P/B of 5.16.
These metrics, and several others, help HOLX earn a Value grade of B, while SONVY has been given a Value grade of D.
HOLX stands above SONVY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HOLX is the superior value option right now.
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Hologic, Inc. (HOLX): Free Stock Analysis Report SONOVA HOLDING (SONVY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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